ABSTRACT
In Chapter 10, we showed that product differentiation can have a positive social impact. In the spatial model of product differentiation, desirable locations are good for the economy because they minimize the costs of obtaining goods and services and therefore increase consumer welfare. Similarly, given a choice between good and bad service, many consumers pay a premium to receive good service. The premium price that consumers voluntarily pay to eat Ben & Jerry’s or Häagen-Dazs ice cream instead of lower-quality brands also has social value. 1
