The Role of Quality in Competition Analysis

Nominally, competition policy is just as concerned with quality as it is with prices. But in practice, courts and competition authorities rarely analyze quality effects as rigorously as they analyze price effects. We begin this paper by examining some of the reasons why that is so. We then delve into some definitional questions associated with quality, including whether choice is an aspect of quality, and whether quality can be used to define markets. Then we turn to the question of how changes in the level of competition affect quality, examining that issue from the perspectives of both microeconomic theory and empirical studies. Finally, we look at how quality concerns have been analyzed by courts and competition authorities in a variety of competition law enforcement contexts.