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Group consumption and product diversity: the case of smoking bans

Foucart, Renaud

Authors

Renaud Foucart



Abstract

I study product diversity in the presence of search costs and groups of consumers. Groups with heterogeneous tastes create a leverage effect on competition: a large majority of firms may end up offering a product that corresponds to the taste of the minority. I illustrate this idea with smoking bans in bars and restaurants. When the first nonsmoking restaurants opened, there were few of them with little competition and high market power on nonsmokers. By extracting a large surplus from nonsmokers, nonsmoking restaurants became unattractive to other groups, while smoking restaurants were plenty and competitive, attracting both smokers and mixed groups.

Journal Article Type Article
Publication Date Sep 30, 2017
Journal Journal of Industrial Economics
Print ISSN 0022-1821
Electronic ISSN 1467-6451
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 65
Issue 3
APA6 Citation Foucart, R. (2017). Group consumption and product diversity: the case of smoking bans. Journal of Industrial Economics, 65(3), doi:10.1111/joie.12137
DOI https://doi.org/10.1111/joie.12137
Publisher URL https://doi.org/10.1111/joie.12137
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
Additional Information This is the peer reviewed version of the following article: Foucart, R. (2017), Group Consumption and Product Diversity: The Case of Smoking Bans. J Ind Econ, 65: 559–584. doi:10.1111/joie.12137, which has been published in final form at https://doi.org/10.1111/joie.12137. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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