Although 23 states barred the self-service sale of gasoline in 1968, most removed the bans by the mid1970s. By 1992, self-service outlets sold nearly 80% of all U.S. gas, and only New Jersey and Oregon continued to ban self-service sales. Using predicted values for self-service sales for New Jersey and Oregon, Johnson, and Romeo (2000) estimate that the ban in those two states raised the price by approximately 3¢ to 5¢ per gallon. Why did the ban affect the price? Illustrate using a figure and explain. Show the welfare effects in your figure. Use a table to show who gains or loses.

Google, Yahoo, and other Internet search companies charge advertisers for each click on their ads (which sends the browser to the advertiser’s Web site). Per click advertising fees present an opportunity for “click fraud,” an industry term describing someone (say, a rival firm or a hacker) clicking on a Web search ad with ill intent. If the advertiser can demonstrate that a click was fraudulent, the search company does not bill for that click. A market for click-fraud detectives has developed to fight click fraud. The market demand for the detectives depends on the amount of fraud they can catch, which reduces the firm’s advertising bill. Let denote the per-click fee, n denote the number of clicks per month an advertiser generates, and X be the fraction of clicks that are fraudulent. Let Z represent the fraction of fraudulent clicks that a detective can prove are fraudulent.