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Quality and Competition: An Empirical Analysis across Industries

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Abstract

This paper empirically explores the link between quality and concentration in a cross-section of manufactured goods. Using concentration data and product quality indicators, an ordered probit estimation explores the impact of concentration on quality that is defined as an index of quality characteristics. The results demonstrate that market concentration and quality are positively correlated across different industries. When industry concentration increases, the likelihood of the product being higher quality increases and the likelihood of observing a lower quality decreases.

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  • John M. Crespi & Stéphan Marette, 2006. "Quality and Competition: An Empirical Analysis across Industries," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 06-wp420, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:fpaper:06-wp420
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    1. Asher Wolinsky, 1993. "Competition in a Market for Informed Experts' Services," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 380-398, Autumn.
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    Keywords

    concentration; market structure; ordered probit; product differentiation; product quality.;
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