The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment
| Autor: | Matias Busso, Sebastian Galiani |
|---|---|
| Rok vydání: | 2019 |
| Předmět: |
Labour economics
Service quality Public economics Field experiment media_common.quotation_subject 05 social sciences Causal effect Conditional cash transfer Context (language use) Affect (psychology) jel:L1 Microeconomics Product (business) Competition (economics) Intervention (law) jel:I3 0502 economics and business Quality (business) jel:D4 Business 050207 economics General Economics Econometrics and Finance 050205 econometrics Retail sector media_common |
| Zdroj: | American Economic Journal: Applied Economics. 11:33-56 |
| ISSN: | 1945-7790 1945-7782 |
| Popis: | This paper provides the first experimental evidence on the effect of increased competition on the prices and quality of goods. We rely on an intervention that randomized the entry of 61 retail firms (grocery stores) into 72 local markets in the context of a conditional cash transfer program that serves the poor in the Dominican Republic. Six months after the intervention, product prices in the treated districts had decreased by about 6%, while product quality and service quality had not changed. Using a theoretical model, we arrive at the conclusion that the poor segments of the population in these markets care the most about prices and much less about quality. Our results are also informative to the design of social policies. They suggest that policymakers should pay attention to supply conditions even when the policies in question will only affect the demand side of the market. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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