Nonsensical. Many companies cut corners to save a buck. You're assuming companies want to be in markets for the long run under conditions of perfect competition (ie total market transparency). In reality many business owners are more than happy to make a million $ selling a shitty product then move on to some other market under a new name. You have to make quite a lot of money before the advantages of a reliable brand that consumers can readily identify exceed the incentives to make a quick buck.

Proof: look at all the craptastic companies that sell ersatz products on Amazon. For some kinds of products they can be almost as good as much more expensive offerings, for others you might get a great deal or you might get an explosive paperweight.