A Miniature Masterpiece

Superb NYTimes disquisition on a masterpiece of Indian miniature painting. The text, formatting, visuals, all beautifully done–better than any museum exhibit I can recall.

In addition to the subject matter this piece has a lot to say about online education and how news is becoming a winner take-most market. Note what Tyler and I said on endogenous fixed costs in our piece on online education in the AER and consider how many newspapers could put together a display of this quality.

Shaked and Sutton (1987) and Sutton (1998) show that when quality is primarily vertical, meaning that there is a measure of quality such that all consumers agree that higher quality is more preferred, then increased market size does not result in reduced concentration. Instead, as market size increases, firms invest more in quality, which endogenously increases economies of scale and maintains market concentration.

Along related lines, Berry and Waldfogel (2010) show that there are many more restaurants in larger than smaller cities, but even as city size increases by a factor of 10 there is no tendency for the number of newspapers to increase. Larger cities have more restaurants than smaller cities because economies of scale are limited and quality differs “horizontally,” according to taste (thus, larger cities have more diverse restaurants). Yet larger cities are served by roughly the same number of newspapers as smaller cities because quality is more vertical, most newspaper consumers want more coverage, better writers and more features.

Addendum: Tim and Marcos remind of previous items in this series which I also loved, The Birth of the Self Portrait and A Picture of Change.



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