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2006

Iowa State University

CARD Working Papers

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Quality And Competition: An Empirical Analysis Across Industries, John M. Crespi, Stéphan Marette Mar 2006

Quality And Competition: An Empirical Analysis Across Industries, John M. Crespi, Stéphan Marette

CARD Working Papers

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