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Product quality, product price, and share dynamics in the German compact car market


  • Uwe Cantner
  • Jens J. Krüger
  • René Söllner


The present article examines one of the central elements of evolutionary thinking--competition formalized by the replicator dynamics mechanism. Using data on product characteristics of automobiles sold on the German domestic market over the period 2001--2006, we construct a competitiveness or fitness indicator for each car model applying non-parametric efficiency measurement techniques. The basic question we intend to answer is whether cars providing a higher quality--price ratio for consumers tend to increase their market share compared to variants with lower quality--price ratios. The relationship between a car models' fitness and its market performance is empirically tested in a regression framework. The results show that the principle of "growth of the fitter" is working as suggested by evolutionary theory. In particular, we find that car models with considerably lower fitness than the market average lose additional market shares, whereas models with above-average fitness gain additional market shares. Copyright 2012 The Author 2012. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

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  • Uwe Cantner & Jens J. Krüger & René Söllner, 2012. "Product quality, product price, and share dynamics in the German compact car market," Industrial and Corporate Change, Oxford University Press, vol. 21(5), pages 1085-1115, October.
  • Handle: RePEc:oup:indcch:v:21:y:2012:i:5:p:1085-1115

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    References listed on IDEAS

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    Cited by:

    1. Giovanni Dosi & Emanuele Pugliese & Pietro Santoleri, 2017. "Growth and survival of the `fitter'? Evidence from US new-born firms," LEM Papers Series 2017/06, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Uwe Cantner & Ivan Savin & Simone Vannuccini, 2016. "Replicator dynamics in value chains: explaining some puzzles of market selection," Working Papers of BETA 2016-09, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. Kaldasch, Joachim, 2015. "Dynamic Model of Markets of Homogenous Non-Durables," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 1-12.
    4. Flavio Calvino & Maria Enrica Virgillito, 2016. "The Innovation-Employment nexus: a critical survey of theory and empirics," LEM Papers Series 2016/10, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Uwe Cantner, 2016. "Foundations of economic change—an extended Schumpeterian approach," Journal of Evolutionary Economics, Springer, vol. 26(4), pages 701-736, October.
    6. Jan-Dirk Schmöcker & Tsuyoshi Hatori & David Watling, 2014. "Dynamic process model of mass effects on travel demand," Transportation, Springer, vol. 41(2), pages 279-304, March.
    7. Kaldasch, Joachim, 2014. "Evolutionary Model of Moore’s Law," MPRA Paper 54397, University Library of Munich, Germany.
    8. Claussen, Jörg & Essling, Christian & Kretschmer, Tobias, 2015. "When less can be more – Setting technology levels in complementary goods markets," Research Policy, Elsevier, vol. 44(2), pages 328-339.
    9. van der Vooren, A. & Alkemade, F. & Hekkert, M.P., 2013. "Environmental performance and firm strategies in the dutch automotive sector," Transportation Research Part A: Policy and Practice, Elsevier, vol. 54(C), pages 111-126.

    More about this item

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality


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