October 2012 - Renaud Foucart

Presentations and Conferences
• “On goods and Premises” (under various titles):
◦ University of Mannheim (February 2012), University of Edinburgh (February 2012),
CORE, Université Catholique de Louvain (January 2012), XXXVIth Meeting of the
Spanish Association of Economics (SAEe), Malaga (December 2011), Queen's
University, Belfast (December 2011), Universidad del Pacifico, Lima (December 2011),
European Winter Meeting of the Econometric Society, Tel-Aviv (October 2011),
University of Mannheim (September 2011), EARIE 2011, Stockholm (September 2011),
10th “Journées Louis-André Gérard-Varet”, Institut d'Economie Publique, Marseille (June
2011), ECORE summer school, Louvain La Neuve (May 2011), Doctoral Meeting of
Montpellier (April 2011), ENTER Jamboree at University of Tilburg (February 2011),
ECARES, Université Libre de Bruxelles (November 2010), Doctoral Workshop,
Université Catholique de Louvain (June 2010).
• “Modal Choice and Optimal Congestion” (with Quentin David, under various titles):
◦ Toulouse School of Economics (March 2011), Association for Public Economic Theory
(PET10), Istanbul (Bogaziçi University) (June 2010), 9th “Journées Louis-André Gérard-
Varet”, Institut d'Economie Publique, Marseille (June 2010), ECARES, Université Libre
de Bruxelles (February 2009).
• “A tale of market failure, with an application to smoking bans in bars and restaurants”
(under various titles)
◦ 8th “Journées Louis-André Gérard-Varet”, Institut d'Economie Publique, Marseille (June
2009), ECORE summer school, Brussels (May 2009).
Other: Young researcher selected for the Lindau Nobel Meeting (August 2011). Discussant, ENTER
JAMBOREE at Toulouse School of Economics (February 2010).
Working Papers
1. On goods and premises [ECARES working paper #2012-24]
Abstract:
I show how a market where all sellers share the same information can display price dispersion:
identical goods sold at different prices by different sellers. This happens when goods are sold on
premises of the same quality, but corresponding to different tastes. In the presence of such price
dispersion, a share of the buyers may actually search, but the market remains inefficient at matching
buyers with the right premises. This market failure is independent of search costs, even when they
become arbitrarily small.
2. A tale of market failure, with an application to smoking bans in bars and restaurants [latest
version available on rfoucart.wordpress.com]
Abstract:
Market competition should induce producers to meet consumer demand. Yet, markets often fail to
achieve this outcome. A case in point is the one of bars and restaurant that failed to follow the
increasing demand for non-smoking environments. This paper shows that the existence of
heterogeneous tastes and non-transferable utility on the demand side is sufficient to produce
significant market failures even when competition is essentially perfect. Under fairly general
conditions, the market outcome is such that producers oversupply the product preferred by a minority
of consumers, forcing the majority to consume goods they value less. The reason for this equilibrium
outcome is that groups of consumers with heterogeneous tastes stop buying when the market provides
additional product diversity, thereby reducing aggregate demand. The best policy in terms of
aggregate welfare is either to constrain suppliers to only supply the good demanded by the majority -a
total smoking ban- or to only grant a very small number of licenses for the other product -restricted
smoking licenses. However, no policy intervention can be Pareto improving.