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The Benefits of Revealing Race: Evidence from Minority-Owned Local Businesses

Author

Listed:
  • Abhay Aneja
  • Michael Luca
  • Oren Reshef

Abstract

Is there latent demand to support Black-owned businesses? We explore this question by analyzing a new feature that made it easier to identify Black-owned restaurants on an online platform. We find that labeling restaurants as minority-owned increased customer engagement and firm performance, as measured by online traffic, calls, orders, and in-person visits. These effects were more pronounced in areas characterized by greater support for the Democratic Party and lower implicit bias against racial minorities. Labeled restaurants also see an increase in the fraction of reviews that are written by White customers.

Suggested Citation

  • Abhay Aneja & Michael Luca & Oren Reshef, 2025. "The Benefits of Revealing Race: Evidence from Minority-Owned Local Businesses," American Economic Review, American Economic Association, vol. 115(2), pages 660-689, February.
    • Handle: RePEc:aea:aecrev:v:115:y:2025:i:2:p:660-89
    DOI: 10.1257/aer.20230075
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    Citations

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    Cited by:

    1. Tommaso Bondi & Michelangelo Rossi, 2026. "Online Reviews: Information Content, Drivers, and Platform Design," CESifo Working Paper Series 12427, CESifo.
    2. Fangyan Wang & Sai Liang & Zaiyan Wei, 2025. "Guiding without Generating: Artificial Intelligence (AI)-Enabled Topic Nudges in Online Reviews," Papers 2511.09877, arXiv.org, revised Apr 2026.
    3. Siddharth Sharma & Justin Frake & Jared Watson, 2026. "Symbolic vs. Substantive Support: The Impact of Black Lives Matter on Black-Owned Businesses," Marketing Science, INFORMS, vol. 45(1), pages 45-62, January.
    4. Aaron Anglin & Garry D. Bruton & Marcin Bielicki, 2025. "No Credit for Success, Penalized for Failure? An Examination of Entrepreneur Race, Gender, and Prior Fundraising Track Records in Crowdfunding," Entrepreneurship Theory and Practice, , vol. 49(5), pages 1392-1430, September.

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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