Product Quality and Market Size

37 Pages Posted: 5 Oct 2005

See all articles by Steven Berry

Steven Berry

Yale University - Department of Economics; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management; National Bureau of Economic Research (NBER); University of Minnesota - Twin Cities - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 2004

Abstract

Do larger markets offer better products? The question has implications both for theories of cities and for theories of market organization. We document that in the restaurant industry, where quality is produced largely with variable costs, the range of qualities on offer increases in market size, with each product maintaining a small market share. In daily newspapers, where quality is produced with fixed costs, the average quality of products increases with market size, but the market does not offer much additional variety as it grows large. These results are consistent with recent IO theories of endogenous product quality and are consistent with theories of cities that place an emphasis on the consumption advantages of cities.

Keywords: quality competition, newspapers, restaurants

JEL Classification: L11, L13, L82

Suggested Citation

Berry, Steven T. and Waldfogel, Joel, Product Quality and Market Size (November 2004). Yale Working Papers on Economic Applications and Policy Discussion Paper No. 1. Available at SSRN: https://ssrn.com/abstract=817111

Steven T. Berry (Contact Author)

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8264
United States
203-432-3556 (Phone)
203-432-6323 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Joel Waldfogel

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Minnesota - Twin Cities - Department of Economics ( email )

271 19th Avenue South
Minneapolis, MN 55455
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
350
Abstract Views
2,933
rank
77,311
PlumX Metrics