American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Competitive Pressure and the Adoption of Complementary Innovations
American Economic Review
vol. 102,
no. 4, June 2012
(pp. 1540–70)
Abstract
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. (JEL D24, K21, L21, L22, L62, O32)Citation
Kretschmer, Tobias, Eugenio J. Miravete, and José C. Pernías. 2012. "Competitive Pressure and the Adoption of Complementary Innovations." American Economic Review, 102 (4): 1540–70. DOI: 10.1257/aer.102.4.1540Additional Materials
JEL Classification
- D24 Production; Cost; Capital, Total Factor, and Multifactor Productivity; Capacity
- K21 Antitrust Law
- L21 Business Objectives of the Firm
- L22 Firm Organization and Market Structure
- L62 Automobiles; Other Transportation Equipment
- O32 Management of Technological Innovation and R&D