Measuring discrimination
2007-11-03 · Original WordPress address
Ok. So the Marxists/Pluralists/Heterodoxies say that mainstream economics doesn't say anything about the role of Power in society. Fine. I'll say it. Power has a role in society. ((Phew, that felt good.))
Every firm, to some extent, has market power. A gas station on your side of the street is slightly more convenient to get to and their prices could be that much higher. It might be worth that extra penny to not have to cross the street. ((In fact, I wonder if you could predict the price difference between adjacent stations using the difference in one-way traffic on the street separating the stations.))
Tim Harford (who has a great book) discusses research that shows women get worse service in coffee shops. It takes, on average, 20 seconds more for women to get service relative to men (controlling for the type of drink and probably other attributes of the person). Competition between shops should drive discrimination out. If a shop discriminates, coffee drinkers vote with their feet. So what's going on here? Harford says:
The research on coffee shops is an interesting curiosity: coffee retailing seems to be fiercely competitive. How can discrimination continue?
One answer, perhaps, is that a rival coffee shop would have to be very close indeed to justify a trip aimed at avoiding a 20-second wait. Even coffee retailing isn’t that competitive.
There you have it, you Marxist, here's a way to measure Power. Go to it.