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Competitive Pressure and the Adoption of Complementary Innovations

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  • Tobias Kretschmer
  • Eugenio J. Miravete
  • Jose C. Pernias

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)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 4 (June)
Pages: 1540-70

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Handle: RePEc:aea:aecrev:v:102:y:2012:i:4:p:1540-70

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  1. Miravete, Eugenio J. & Pernias, Jose C., 1998. "Innovation Complementarity and Scale of Production," Working Papers 98-42, C.V. Starr Center for Applied Economics, New York University.
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Citations

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Cited by:
  1. George van Leeuwen & Pierre Mohnen, 2013. "Revisiting the Porter Hypothesis: An Empirical Analysis of Green Innovation for the Netherlands," CIRANO Working Papers 2013s-02, CIRANO.
  2. Hottenrott, Hanna & Rexhäuser, Sascha & Veugelers, Reinhilde, 2014. "Green innovations and organizational change: Making better use of environmental technology," ZEW Discussion Papers 12-043 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Hou, Jun & Mohnen, Pierre, 2013. "Complementarity between internal knowledge creation and external knowledge sourcing in developing countries," MERIT Working Papers 010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  4. Maican, Florin G., 2012. "From Boom to Bust and Back Again: A dynamic analysis of IT services," Working Papers in Economics 543, University of Gothenburg, Department of Economics.
  5. Kretschmer, Tobias & Rösner, Mariana, 2010. "Increasing Dominance - the Role of Advertising, Pricing and Product Design," Discussion Papers in Business Administration 11500, University of Munich, Munich School of Management.
  6. Van Leeuwen, George & Polder, Michael, 2013. "Linking ICT related Innovation Adoption and Productivity: results from micro-aggregated data versus firm-level data," MPRA Paper 46479, University Library of Munich, Germany.

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