This month's Feature Article on Econlib, by economist Robert Murphy, is the nicest succinct article I've seen on how free markets make people pay a price for the kind of discrimination that most people abhor. He points out also that much of the discussion of discrimination in the South seemed fuzzy about whether it was the free market or government regulation in action. Great paragraph:
It's also important to mention that in the case of segregated lunch counters--the issue at the heart of the Rand Paul controversy--this was not a purely free-market outcome. Remember they weren't called Jim Crow "best practices," but were Jim Crow laws. We can never know for sure what the racial policies of Southern businesses would have been in the 1950s in a genuine laissez-faire environment. What we do know is that discriminatory business owners would have more acutely felt the costs of their policies without government mandates enforcing them on the whole industry.