This article investigates the influence of competition on price and product quality among Austrian camping sites, a market
characterised by both horizontal (spatial) and vertical product differentiation. Theoretically, the effect of competition
on quality is ambiguous and depends on the degree of cost substitutability between output and quality. Estimating a system
of equations shows that intense competition has a positive impact on product quality and a negative effect on prices (conditional
on quality). As high quality is associated with high prices, the total effect of competition on prices is rather small.
Research group:Regional Economics and Spatial Analysis
