To explore the theoretical relation of newspaper competition to overall news quality, a study used a model of newspaper competition based on economic assumptions to investigate whether the product quality of a newspaper is positively related to the financial expenditure on it, and whether newspaper circulation is positively related to quality. Data was reanalyzed from a content analysis of 114 newspapers (including 72 monopoly, 21 competitive, and 21 joint-operating-agreement newspapers) from a constructed week in November 1984. Findings showed statistically significant support for the relationship between financial commitment and quality, though not as strong as expected. Support for the relationship between news quality and circulation was strong, with quality accounting for a fairly large proportion of variance in circulation. These results suggest that competition makes better newspapers through financial commitment and that better newspapers sell more copies as a general rule. (One table of data and 32 endnotes are included.) (SR)