Waldfogel and Schwartz Reconciled:

My initial reaction to Joel Waldfogel's argument that the market gives us too few choices was that it directly contradicts Barry Schwartz's claim that it gives us too many because it is hard for consumers to decide which of the bewildering array of options available is best for them. However, it is theoretically possible that both are right.

Waldfogel argues that markets give us too few choices because they fail to provide products that satisfy minority preferences in situations where there are high startup costs or fixed costs. For example, there are very high fixed costs to producing a new type of car. That implies that markets will not have this problem in situations where the fixed costs are low. For example, there are millions of websites that cater to small, specialized audiences because the fixed costs of establishing a website are low.

This suggests that markets could theoretically provide too little variety of products with high fixed production costs, and too much of products with low fixed production costs. Maybe there are too few car models, but too many websites.

For reasons that I explained in my previous posts discussing Waldfogel and Schwartz's arguments (here and here), I think that both of them are wrong. Markets generally do a good job of both satisfying minority preferences and reducing the costs of choice for consumers who don't want to do detailed comparison shopping. However, it is worth noting that it is theoretically possible for Waldfogel to be right about one set of products, and Schwartz about another.