Michael Luca of Harvard Business School has a new paper studying the effects of Yelp.com on the restaurant industry. Three big findings: First, “a one-star increase in Yelp rating leads to a 5-9 percent increase in revenue.” No surprise, good reviews help restaurants. Second, this mainly affects smaller, independent establishments. A Yelp review has no effect on an individual chain restaurant like Applebee’s, presumably because people already have firm impressions of those places.
The link comes via Adam Ozimek, who notes that this sort of thing represents a real improvement in our standard of living, although one that’s hard to detect from inflation statistics and the like.
Related Links:
Will a fat tax make Denmark healthier?
