Quarterly Journal of Economics Vol. 126 No. 3 2011
Competition and Product Quality in the Supermarket Industry
open access
Abstract
This article analyzes the effect of competition on a supermarket firm's incentive to provide product quality. In the supermarket industry, product availability is an important measure of quality. Using U.S. Consumer Price Index microdata to track inventory shortfalls, I find that stores facing more intense competition have fewer shortfalls. Competition from Walmart—the most significant shock to industry market structure in half a century—decreased shortfalls among large chains by about a third. The risk that customers will switch stores appears to provide competitors with a strong incentive to invest in product quality.
- DOI
- 10.1093/qje/qjr031
- Volume
- 126
- Issue
- 3
- Pages
- 1539-1591
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref