Renaud Foucart

Group Consumption and Product Diversity: The Case of Smoking Bans

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.

Transport infrastructure failures in Spain: mismanagement and incompetence, or political capture?: Real World Challenges

Although Spain ranks remarkably well in international comparisons in terms of access to transport infrastructures, it does not seem to meet demand, leading to well-documented mismatches between demand and supply. This is a recurring hot political theme in Spain as in many other countries, developed and developing. The consequences are costly, unfair and unsustainable in the current context of economic crisis. So what’s the problem? This chapter argues that bad governance, capture and political interests, rather than incompetence, are the main drivers of supply–demand mismatches. The current state of transport infrastructure is above all the result of a strong political will to maintain Madrid as the centre of distribution of the economic benefits of all decisions on transport infrastructure investment.1 While it is fair for elected politicians to use their mandate to make tough decisions, it would be just as fair to make sure that they do not ignore the high economic and social costs for the country (Albalate and Bel, 2011; Bel, 2011, 2012; Bel and Fageda, 2011; De Rus, 2011). Moreover, there are reasons to suspect that key private actors have captured some policy decisions. The high concentration and strong political leverage of construction companies specializing in infrastructure have fuelled the sector’s overinvestment and high fiscal costs. This interference with the planning and implementation of key decisions in the sector has not reached the outrageous levels of corruption cases documented in urban development projects, but the consequences are no less dramatic for Spain.2