EVER since the publication of Chamberlin's Theory of Monopolistic Competition [6], economists have known that how well a market economy solves the three-way trade-off among product variety, economies of scale, and purity of competition critically affects the level of economic welfare. Following a long period of neglect, there has recently been an explosion of work on the theory of optimal product variety. Although unsettled questions remain, the theory reveals that whether monopolistic competition yields the welfare- maximizing amount of product variety, too little, or too much, depends upon the relationships among several potentially observable variables. Except for the rather special cases of television programming and service competition among publicly regulated airlines,1 there has been little effort to apply the theory to real-world market situations. This paper attempts to extend the set of applications to a situation in which the visible hand of regulation was largely absent.