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Primary market and aftermarket competition in the bicycle component industry

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  • Paul Isely
  • Matthew Roelofs

Abstract

This study examines the bicycle component industry. This industry is characterized by one dominant firm, Shimano Inc., and four or five smaller players. Firms in the component industry produce components for sale in two related markets, the market for original equipment manufacturers (OEM) and the component aftermarket. A unique data set containing information on aftermarket prices and OEM market shares is used to determine whether or not market power in the aftermarket is a function of OEM market power. The results indicate that concentration in the OEM market is positively related to aftermarket price, while an individual firm's OEM market share is inversely related to aftermarket price.

Suggested Citation

  • Paul Isely & Matthew Roelofs, 2004. "Primary market and aftermarket competition in the bicycle component industry," Applied Economics, Taylor & Francis Journals, vol. 36(18), pages 2097-2102.
    • Handle: RePEc:taf:applec:v:36:y:2004:i:18:p:2097-2102
    DOI: 10.1080/0003684042000258657
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    References listed on IDEAS

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    1. Chen, Zhiqi & Ross, Thomas W., 1999. "Refusals to deal and orders to supply in competitive markets," International Journal of Industrial Organization, Elsevier, vol. 17(3), pages 399-417, April.
    2. Severin Borenstein & Jeffrey K. Mackie‐Mason & Janet S. Netz, 2000. "Exercising Market Power in Proprietary Aftermarkets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 9(2), pages 157-188, June.
    3. Zhiqi Chen & Thomas W. Ross, 1998. "Orders to Supply as Substitutes for Commitments to Aftermarkets," Canadian Journal of Economics, Canadian Economics Association, vol. 31(5), pages 1204-1224, November.
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    Cited by:

    1. Gatti, Corrado & Volpe, Loredana & Vagnani, Gianluca, 2015. "Interdependence among productive activities: Implications for exploration and exploitation," Journal of Business Research, Elsevier, vol. 68(3), pages 711-722.
    2. Galvin, Peter & Burton, Nicholas & Nyuur, Richard, 2020. "Leveraging inter-industry spillovers through DIY laboratories: Entrepreneurship and innovation in the global bicycle industry," Technological Forecasting and Social Change, Elsevier, vol. 160(C).

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