Competitive Pressure and the Adoption of Complementary Innovations

54 Pages Posted: 28 Mar 2011  

Tobias Kretschmer

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)

Eugenio J. Miravete

University of Texas at Austin; Centre for Economic Policy Research (CEPR)

José C. Pernías

Jaume I University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2011

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.

Keywords: Competitive Pressure, Complementarity, Product and Process Innovation

JEL Classification: C35, L86, O31

Suggested Citation

Kretschmer, Tobias and Miravete, Eugenio J. and Pernías, José C., Competitive Pressure and the Adoption of Complementary Innovations (March 2011). CEPR Discussion Paper No. DP8289. Available at SSRN: https://ssrn.com/abstract=1794879

Tobias Kretschmer (Contact Author)

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, 80539
Germany

Centre for Economic Policy Research (CEPR) ( email )

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

Eugenio J. Miravete

University of Texas at Austin ( email )

Department of Economics
1 University Station C3100
Austin, TX 78712-0301
United States
512-232-1718 (Phone)
512-471-3510 (Fax)

HOME PAGE: http://www.eco.utexas.edu/facstaff/Miravete

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

José C. Pernías

Jaume I University - Department of Economics ( email )

Campus del Riu Sec.
E-12071 Castellon
Spain
34 96 472 8610 (Phone)
34 96 472 8591 (Fax)

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