The Tyranny of the Market

Why You Can't Always Get What You Want

by Joel Waldfogel

Published by Harvard University Press, Fall 2007.

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Description

Economists have long counseled reliance on markets rather than government to decide a wide range of questions, in part because allocation through voting can give rise to “tyranny of the majority.” Markets, by contrast, are believed to make products available to suit any individual, regardless of what others want. But the argument is not generally correct. In markets, you can’t always get what you want. This book explores why this is so along with its consequences for consumers with atypical preferences.

When fixed costs are substantial, markets provide only products desired by large concentrations of people. As a result, people are better off, in their capacity as product consumers, when more fellow consumers share their product preferences. Small groups of consumers with less prevalent tastes, such as blacks, Hispanics, people with rare diseases, and people living in remote areas find less satisfaction in markets. In some cases, actual tyranny of the majority occurs in product markets. A single product can suit one group or another. As one group is larger, the product is targeted to the larger group, making them better off and others worse off.

This book illustrates these phenomena with evidence from a variety of industries including radio broadcasting, newspapers, air travel, television, restaurants, bookstores, libraries, Internet, and pharmaceuticals. The book is based on research originally published in economics journals but which has been completely rewritten to be accessible to an interested, non-technical audience.

Read an excerpt.

See the table of contents.

See the list of academic papers underlying the book.