IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Competitive Pressure and the Adoption of Complementary Innovations

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

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)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

File URL:
File Function: dataset accompanying article
Download Restriction: no

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

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

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

in new window

Handle: RePEc:aea:aecrev:v:102:y:2012:i:4:p:1540-70
Contact details of provider: Web page:

More information through EDIRC

Order Information: Web:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Bertschek, Irene, 1995. "Product and Process Innovation as a Response to Increasing Import and Foreign Direct Investment," Journal of Industrial Economics, Wiley Blackwell, vol. 43(4), pages 341-57, December.
  2. Richard C. Levin & Peter C. Reiss, 1988. "Cost-Reducing and Demand-Creating R&D with Spillovers," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 538-556, Winter.
  3. Armin Schmutzler, 2007. "The relation between competition and innovation – Why is it such a mess?," SOI - Working Papers 0716, Socioeconomic Institute - University of Zurich, revised Jan 2010.
  4. repec:oup:qjecon:v:117:y:2002:i:1:p:339-376 is not listed on IDEAS
  5. Boone, J., 2000. "Competitive pressure : The effects on investments in product and process innovation," Other publications TiSEM 88418185-7603-4c36-92fd-3, Tilburg University, School of Economics and Management.
  6. MacDonald, James M, 1994. "Does Import Competition Force Efficient Production?," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 721-27, November.
  7. Chad Syverson, 2001. "Market Structure and Productivity: A Concrete Example," Working Papers 01-06, Center for Economic Studies, U.S. Census Bureau.
  8. Patrick Rey & Joseph Stiglitz, 1994. "The Role of Exclusive Territories in Producers' Competition," NBER Working Papers 4618, National Bureau of Economic Research, Inc.
  9. Prantl, Susanne & Howitt, Peter & Griffith, Rachel & Blundell, Richard & Aghion, Philippe, 2004. "Entry and Productivity Growth: Evidence From Microlevel Panel Data," Scholarly Articles 4481510, Harvard University Department of Economics.
  10. Frank Verboven, 1996. "International Price Discrimination in the European Car Market," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 240-268, Summer.
  11. Miravete, Eugenio J & Pernías, Jose C, 2004. "Innovation Complimentarity and Scale of Production," CEPR Discussion Papers 4483, C.E.P.R. Discussion Papers.
  12. Rothenberg, Thomas J, 1971. "Identification in Parametric Models," Econometrica, Econometric Society, vol. 39(3), pages 577-91, May.
  13. Jacob Schmookler, 1959. "Bigness, Fewness, and Research," Journal of Political Economy, University of Chicago Press, vol. 67, pages 628.
  14. Miravete, Eugenio J. & Pernías, José C., 2010. "Testing for complementarity when strategies are dichotomous," Economics Letters, Elsevier, vol. 106(1), pages 28-31, January.
  15. Boone, Jan, 2000. "Competition," CEPR Discussion Papers 2636, C.E.P.R. Discussion Papers.
  16. Michael J. Mazzeo, 2002. "Product Choice and Oligopoly Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 221-242, Summer.
  17. Rosenkranz, Stephanie, 2003. "Simultaneous choice of process and product innovation when consumers have a preference for product variety," Journal of Economic Behavior & Organization, Elsevier, vol. 50(2), pages 183-201, February.
  18. José E. Galdón-Sánchez & James A. Schmitz Jr., 2002. "Competitive Pressure and Labor Productivity: World Iron-Ore Markets in the 1980's," American Economic Review, American Economic Association, vol. 92(4), pages 1222-1235, September.
  19. Berry, Steven T, 1992. "Estimation of a Model of Entry in the Airline Industry," Econometrica, Econometric Society, vol. 60(4), pages 889-917, July.
  20. repec:oup:qjecon:v:109:y:1994:i:4:p:921-55 is not listed on IDEAS
  21. repec:oup:restud:v:68:y:2001:i:4:p:811-48 is not listed on IDEAS
  22. repec:oup:restud:v:66:y:1999:i:3:p:529-54 is not listed on IDEAS
  23. Susan Athey & Armin Schmutzler, 1995. "Product and Process Flexibility in an Innovative Environment," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 557-574, Winter.
  24. Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-91, September.
  25. Xavier Vives, 2008. "INNOVATION AND COMPETITIVE PRESSURE -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 419-469, December.
  26. Kamien,Morton I. & Schwartz,Nancy L., 1982. "Market Structure and Innovation," Cambridge Books, Cambridge University Press, number 9780521293853.
Full references (including those not matched with items on IDEAS)

This item is featured on the following reading lists or Wikipedia pages:

  1. Competitive Pressure and the Adoption of Complementary Innovations (AER 2012) in ReplicationWiki

When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:102:y:2012:i:4:p:1540-70. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)

or (Michael P. Albert)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.