RESTRAINTS ON QUALITY COMPETITION

Roger Blair (University of Florida) and Christine Piette Durrance (UNC-Chapel Hill) discuss RESTRAINTS ON QUALITY COMPETITION.

ABSTRACT: Although restraints on price competition and economically analogous conduct have been analyzed extensively, restraints on quality competition have received little attention. In this article, we consider the economics of collusion on quality with both informed and deliberately misinformed consumers. In addition, we analyze restraints that prevent or impede quality competition. Using actual antitrust cases and economic analysis, we show the associated effects of this collusive behavior on consumer welfare. We then discuss the appropriate antitrust treatment of different types of restraints on quality competition.