The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment

Matias Busso and Sebastian Galiani

American Economic Journal: Applied Economics, 2019, vol. 11, issue 1, 33-56

Abstract: This paper provides experimental evidence on the effect of increased competition on prices and quality in the retail sector. We randomized the entry of 61 firms into 72 markets serving the beneficiaries of a conditional cash transfer program in the Dominican Republic. Six months after the intervention entry into the market led to reductions in prices ranging from 2 to 6 percent and to a statistically significant improvement in self-reported service quality. Prices dropped more in areas where the number of entrants was larger. Competition seems to have driven part of the clientele away from incumbent retailers.

JEL-codes: C93 I38 L11 L15 L81 O14 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/app.20150310
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Citations: View citations in EconPapers (23)

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Working Paper: The Causal Effect of Competition on Prices and Quality: Evidence from a Field Experiment (2014)
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