The article explores how different types of costs affect the quality of products in a market with multiple firms. When quality upgrades are expensive, firms specialize in either high or low quality. As the market grows, more firms focus on high quality, leading to lower prices and more uniform markups. When quality upgrades are cheaper, all firms offer both high and low quality products. In this case, as the market expands, the share of high-quality products increases, but not the quantity sold. Trade liberalization has similar effects to market expansion, but may reduce the supply of high-quality products from smaller economies.