Competitive pressure and the adoption of complementary innovations

Kretschmer, Tobias, Miravete Marin, Eugenio and Pernías, José C. (2012) Competitive pressure and the adoption of complementary innovations. American Economic Review, 102 (4). pp. 1540-1570. ISSN 0002-8282

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Liberalization of the European automobile distribution system in 2002 limits the ability of manufacturers to impose vertical restraints, leading to a substantial increase in competitive pressure among dealers. We estimate an equilibrium model of profit maximization to evaluate how dealers change their innovation adoption strategies following the elimination of exclusive territories. Using French data we evaluate the existence of complementarities between the adoption of software applications and the scale of production. Firms view these innovations as substitutes and concentrate their effort in one type of software as they expand their scale of production. Results are robust to the existence of unobserved heterogeneity.

Item Type: Article
Faculty \ School: Faculty of Social Sciences > School of Economics
UEA Research Groups: Faculty of Social Sciences > Research Groups > Industrial Economics
Faculty of Social Sciences > Research Centres > Centre for Competition Policy
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Depositing User: Pure Connector
Date Deposited: 22 Nov 2013 14:23
Last Modified: 17 May 2023 00:56
DOI: 10.1257/aer.102.4.1540

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