differ along a large number of physical attributes. We access a proprietary dataset from a large hotel chain that allows us …

on quality. We examine the U.S. hotel industry during the past half century. We document that starting in the early 1980s …, quality competition came more in the form of costs that vary with hotel size, and less in the form of costs that are fixed … with hotel size, particularly for business travelers. We then show that, consistent with Sutton (1991), industry structure …