This dissertation consists of three studies about product quality and sequential auctions. The first study develops a model of product differentiation in which firms strategically compete in product quality and advertising intensity. Products exhibit a combination of vertical and horizontal differentiation. Consumers' utility has a stochastic relationship with quality, and consumers are more likely to prefer a higher quality good. Consumers face a trade-off between higher quality goods and price. Increased competition leads to less advertising, but may result in higher or lower quality products offered in the market.