Markets are generally thought to avoid problems, such as tyranny of the majority, that arise when allocation is accomplished through collective processes. Yet, with fixed costs, differentiated product markets deliver only products desired by substantial constituencies. When consumers share...

Markets are generally thought to avoid problems, such as tyranny of the majority, that arise when allocation is accomplished through collective processes. Yet, with fixed costs, differentiated product markets deliver only products desired by substantial constituencies. When consumers share...

When consumers share similar preferences, additional consumers will bring forth products that confer positive "preference externalities" on others. However, if distinct groups of consumers have substantially different preferences, the groups bring forth products with more appeal to themselves...