College of Law Faculty Scholarship
Source Publication (e.g., journal title)
Journal of Antitrust Enforcement
Document Type
Article
Publication Date
January 2015
Abstract
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 when an increase in competition can actually reduce consumer welfare. We also identify two necessary, but not sufficient, conditions that are common to every scenario.With these two conditions in mind, we provide instances when an increase in competition will not increase quality (when one would expect it should). We also provide instances when an increase in competition will lead to quality degradation.
Recommended Citation
Stucke, Maurice and Ezrachi, Ariel, "The Curious Case of Competition and Quality" (2015). College of Law Faculty Scholarship. 236.
https://ir.law.utk.edu/utk_lawpubl/236