Journal Article

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

Uwe Cantner, Jens J. Krüger and René Söllner

in Industrial and Corporate Change

Volume 21, issue 5, pages 1085-1115
Published in print October 2012 | ISSN: 0960-6491
Published online February 2012 | e-ISSN: 1464-3650 | DOI: https://dx.doi.org/10.1093/icc/dts002
Product quality, product price, and share dynamics in the German compact car market

More Like This

Show all results sharing these subjects:

  • Household Behaviour and Family Economics
  • Market Structure, Firm Strategy, and Market Performance
  • Economic Development

GO

Show Summary Details

Preview

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.

Keywords: O12; D12; L15

Journal Article.  10254 words.  Illustrated.

Subjects: Household Behaviour and Family Economics ; Market Structure, Firm Strategy, and Market Performance ; Economic Development

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content. subscribe or login to access all content.