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The Curious Case Of Competition And Quality, Maurice Stucke, Ariel Ezrachi

Scholarly Works

Alongside the consideration of price, competition authorities recognize that quality can be as, if not more, important in some markets. But as competition authorities also recognize, identifying the dimensions of competition important to many consumers is difficult. Even when these dimensions of quality are identified, measuring them represents additional challenges.

To circumvent these challenges, competition authorities rely on several heuristics when assessing a merger’s, cartel’s or monopolistic restraint’s impact on quality. Often the heuristics work well for the competition authorities.

Our paper, however, identifies several scenarios where these heuristics break down, when competition and quality are not positively correlated, and …