Do larger markets offer better products? The question has implications both for theories of cities and for theories of market organization. We document that in the restaurant industry, where quality is produced largely with variable costs, the range of qualities on offer increases in market...

Different groups of people experience varying degrees of different externalties. By a government's choice of expenditures to control externalities, it affects different members of the population differently. These choices implicitly "value" the welfare of members of different groups. This paper...

Theory predicts that in markets with increasing returns, the number of differentiated products, and the tendency to consume, will grow in market size. I document this phenomenon across 247 U.S. radio markets. By a mechanism that I term "preference externalities," an increase in the size of the...

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...

Scholars working on the border of economics and psychology have assembled an impressive body of evidence that consumer behavior is not fully rational. As a result some observers (see Kahneman, 1994) question whether consumer choice warrants deference. We address this question by asking whether...

The Pennsylvania Liquor Control Board (PLCB) controls the purchase and sale of alcoholic beverages across the state and is legally mandated to charge a uniform 30% mark-up on all products. This paper investigates the welfare implications of this uniform markup. We show that consumption patterns...

Although revenue for recorded music has collapsed since the explosion of file sharing, results elsewhere suggest that the quality of new music has not suffered. One possible explanation is that digitization has allowed a wider range of firms to bring far more music to market using lower-cost...

While some litigants frequently file cases, very few opposing pairs of litigants appear together frequently. Thus, there is little opportunity for litigants to develop trust or reputation. Lawyers, on the other hand, face each other frequently and participate in a community of lawyers that...

This paper introduces a market based methodology for evaluating the performance of MBA programs. We seek to distinguish the quality of a program from the quality of its students. We judge a program's performance by its value added, measured by the graduates' salaries, after accounting for...