Quality, sunk costs and competition
Résumé
This paper explores the link between quality, cost and concentration. Using concentration and cost data and product quality indicators for 2,244 products in over eighty industries in 1997 and 2002 in the US, a two-stage, ordered probit, random effects estimation explores the impact of concentration and cost on quality. The results demonstrate that overall market concentration and high fixed costs are both positively correlated with product quality across most industries. Generally, when either industry concentration or industry fixed costs increase, the likelihood of the product being higher quality increases and the likelihood of observing a lower quality decreases. Further, the authors confirm that prices are a good signal of product quality. A theoretical model is also derived.
Cet article étudie le lien entre qualité, coûts de production et concentration des firmes. En utilisant des données de concentration des firmes et des indicateurs de qualité de produits pour différentes industries en 1997 et 2002 aux Etats Unis, une méthode économétrique explore l’impact de la concentration des firmes sur la qualité des produits. Les résultats montrent une corrélation positive entre concentration et qualité des produits pour la plupart des industries.