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.
Co-authors: Tobias Kretschmer (Institute for Communications Economics, Ludwig-Maximilians-Universität-München) and José C. Pernías (Universidad Jaume I de Castellón).
Publication:American Economic Review, forthcoming (accepted April 2011).
JEL: C35, L86, O31.
First version: October 2008.
Current version: April 2011.
Funding: NET Institute; Anglo-German Foundation; the Research
Council of Norway; and Spanish Ministry of Science and Technology.
Seminars: Universidad de Alicante, Freie
Universität Berlin, U.S. Federal Communications Commission, Kyoto University, Universidade
Técnica de Lisboa, Ludwig-Maximilians-Universität-München,
University of Southern Denmark at Odense, University of Texas at Austin, Universiteit Utretch, Wissenschaftszentrum
Berlin für Sozialforschung (WZB).
Conferences: 2008 LACEA/LAMES meeting
in Rio de Janeiro; V Jornadas sobre Integración Económica, Castellón; 2009 Winter Workshop at the Centre for Competition
and Regulatory Policy at City University London; the 10th CEPR Conference on Applied Industrial Organization, Mannheim, May 2009; and the 2010 NET Institute Conference on Network Economics; and the 2011 SEEK kick-off Conference at ZEW.
