Industry Structure, Segmentation, and Quality Competition in the U.S. Hotel Industry*

We examine how quality competition affects the relationship between market size and industry structure at product level using evidence from U.S. hotel industry. Starting in early 1980s, for business travelers became more based on variable less fixed costs, scale intensive. Since then, increases have been met by more, but smaller, hotels travel destinations continued to be larger personal destinations. Our results illustrate way consumers benefit depends firms compete.