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Presenter: Trevon Logan, Professor of Economics at Ohio State University

Paper: Competition and Discrimination in Public Accommodations: Evidence from the Green Books

This paper seeks to determine the role of market factors in the provision of non-discriminatory services before federal legislation forbade racial discrimination in public accommodations. Using a new county-level dataset constructed from the Negro Motorist Green Books on the number of non-discriminatory public accommodations from 1939 to 1955, we show that exogenous changes in the White population led to increases in non-discriminatory firms in the post-war era. To explore the role of consumer discrimination as the mechanism behind this result, we present a model of firm discrimination where a fraction of White consumers have discriminatory preferences. The model captures the relationship between the ratio of Black-to-White consumers and the ratio of non-discriminatory to discriminatory firms in a local market. Using the number of White casualties in World War II as an instrument for the change in the Black-to-White population ratio, we isolate the effect of a change in the racial composition of consumers on the incentives for firms to racially discriminate. We find that a 1% increase in the ratio of Black-to-White consumers leads to a 2% increase in the ratio of non-discriminatory to discriminatory firms. While our results show that there were limited firm responses to market conditions, ending racial discrimination in public accommodations required federal intervention.