The Tyranny of the Market: Why You Cant Always Get What You Want (Hardcover)

by Joel Waldfogel (Author)

Editorial Reviews

Review
This is a book for all the people out there who sit down and flip through hundreds of channels but never seem to find something they like. In it Joel Waldfogel, one of America's most interesting economists, shows exactly how many people in the marketplace end up stranded, unable to get what they want. It's a provocative statement on why free markets don't necessarily make everyone better off.
--Austan Goolsbee, The University of Chicago Graduate School of Business

The Tyranny of the Market conveys an exciting debate focusing on whether "the market gets it right," allowing each type of consumer to achieve his own goals through participating in markets. An important book.
--Matthew Kahn, University of California, Los Angeles

The Tyranny of the Market presents a fascinating account of why the market fails to satisfy preference minorities.
--Fiona Scott Morton, Yale School of Management

Joel Waldfogel takes up the mythology of the market responding to our wants and desires, and shows how it often leaves out many people who are unable to get very much of what they want...This book could be very persuasive to those who will not listen to voices that have an explicitly progressive agenda. (Tikkun )

Product Description

Economists have long counseled reliance on markets rather than on government to decide a wide range of questions, in part because allocation through voting can give rise to a "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 and 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 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, an actual tyranny of the majority occurs in product markets. A single product can suit one group or another. If one group is larger, the product is targeted to the larger group, making them better off and others worse off.

The book illustrates these phenomena with evidence from a variety of industries such as restaurants, air travel, pharmaceuticals, and the media, including radio broadcasting, newspapers, television, bookstores, libraries, and the Internet.

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Product Details

• Hardcover: 216 pages
• Publisher: Harvard University Press (October 15, 2007)
• Language: English
• ISBN-10: 0674025814
• ISBN-13: 978-0674025813
• Product Dimensions: 8.4 x 5.6 x 0.9 inches
• Shipping Weight: 13.4 ounces (View shipping rates and policies)
• Average Customer Review: 3.3 out of 5 stars See all reviews (3 customer reviews)
• Amazon.com Sales Rank: #928,723 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

4 of 5 people found the following review helpful:

4.0 out of 5 stars Insightful, October 30, 2007

By	Dendrite (Oakland, CA) - See all my reviews

This book makes a great companion to Chris Anderson's The Long Tail. Anderson talks about an emerging trend where some businesses do cater to minority interests. The Tyranny of the Market examines the much more common case facing us today, where businesses cater to the majority and leave others out. It's a useful examination of why they do this, and what the consequences are.

2 of 4 people found the following review helpful:

5.0 out of 5 stars Majority Rule, November 28, 2007

By	PriceTheory - See all my reviews

Economists agree that perfect competition, an ideal situation in which producers respond flawlessly to consumer demand, doesn't exist anywhere on earth. And if perfect competition is a myth, then Milton Friedman's Capitalism and Freedom: Fortieth Anniversary Edition is the authoritative compendium of fairy tales. Friedman applies the perfectly competitive model to everything from public schools to medical licensure, arguing that even if the model doesn't quite mirror reality, it's close enough for government purposes. His conclusion that the state should stay out of the market's way has provoked much ire but little conflicting evidence since the book was first published in 1962.

Now, Wharton School economist Joel Waldfogel has issued an empirical challenge. In The Tyranny of the Market: Why You Can't Always Get What You Want, Waldfogel purports to show how the market can get it wrong. The culprit? Not the evil capitalists often invoked by Friedman's critics, but fixed costs. When production calls for a large up-front expense, consumers are at the mercy of their neighbors. If many others in your metro area like baseball as much as you do, the market will provide a stadium, and you'll be free to choose that form of entertainment. If you live in rural Wyoming, you're out of luck. The interesting situation occurs when the market can support only one product about which people disagree. For example, there's one newspaper in town; will it focus on political issues or gardening advice? In this case, the paper will position itself to satisfy the desires of the majority. Area residents with green thumbs may end up unhappy, but it won't be profitable for them to start their own paper. It's the tyranny of the majority we know from elections and government directives, this time arising naturally in a free-market setting.

Waldfogel's research is an intriguing foray into the workings of real-life markets. He examines the economics of blockbuster movies and bookstores, airplanes and automobiles. But his equivocal policy recommendations sometimes fail to convince. It may be true that government mandates to provide telephone service to rural communities bring net social benefits that the free market couldn't. On the other hand, do we really need to worry because our available restaurant options are shaped by our neighbors' preferences? Waldfogel shows that mostly black urban neighborhoods predominantly contain restaurants serving foods black customers prefer, while wealthy suburbs are more likely to be home to trendy bagel shops. Only a Wharton School professor would see those statistics as evidence of markets not working. If the real world falls short of the perfectly competitive utopia in which each neighborhood contains every kind of restaurant, well, as an economist would say, "That's scarcity." Or as the rest of us would say, "That's life."

Most disappointingly, Waldfogel doesn't discuss how government policies themselves impose fixed costs on businesses. Bad policies have contributed to many of the "market failures" he wants to remedy with further government interventions. For instance, Waldfogel mentions the high fixed costs associated with pharmaceutical research, and he notes that this results in a focus on treating common ailments. He cites grants for research on "orphan" diseases as a corrective policy. But nowhere does he discuss the lengthy and expensive FDA approval process, which ensures that drugs aimed exclusively at rare conditions will never be profitable.

Despite the books' shortcomings, The Tyranny of the Market makes a valuable contribution to the market vs. state debate. Waldfogel warns us that markets won't necessarily avoid the contentious tone of politics. This point is especially clear in the case of immigration. Daily newspaper circulation is falling, Waldfogel writes, and "Newspaper publishers view the growth opportunity of burgeoning Hispanic populations as a way to stem the decline. But attracting Hispanic readers without alienating Anglos is difficult." In some cases, English speakers have canceled their subscriptions after newspapers experimented with Spanish-language pages. Political disputes over immigration are bitter; private-sector controversies can be bitter too.

People in the majority have an advantage over others both at the polls and at the mall. Although there isn't an official vote about which goods will be made, producers cater to the majority's tastes. There's reason to hold on to a Friedman-esque caution of government, but economists will continue to debate whether we're really free to choose.

2 of 20 people found the following review helpful:

1.0 out of 5 stars So we all can't get what we want...why is that tyranny?, October 22, 2007

By	David R. Uitenbroek - See all my reviews (REAL NAME)

What a waste of paper and peoples time. In the end you can't decide what is better, government intervention or let the free market decide. The idea that the market should cater to small amounts of consumers is ludicrous with no suggestions on how to economically do it? So majority rules is Tyranny...ho hum. If you like fruitless debate with no deciveness, if you like living in the gray, this book is for you.