Evidence on Agglomeration in Quality Space

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This paper is an empirical study of agglomeration in quality space. Data has been collected for 175 German commodities that the consumer testing agency Test has tested on a number of quality characteristics for a number of brands for each commodity, thus providing product positions in quality space. The major findings are that agglomeration seems to be the norm rather than the exception, and that the market does not usually fail consumers wanting a high-quality brand but may fail consumers wanting a low-quality brand.