Top

Empirical Economics

Published in:

17-10-2017

The effects of competitors on new product launch and market expansion in the hybrid car market

Author: Yizao Liu

Published in: Empirical Economics | Issue 4/2018

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

This paper evaluates the effect of competitors on automakers’ new product launch and market expansion decisions in the hybrid car market. Using data from the entire history in US hybrid car market from 2000 to 2014, this paper estimates a Poisson model with endogeneous switching to account for the initial launch and the following expansion decisions. The results indicate that the presence of competing brands’ hybrid vehicle models has a net positive effect on a brand’s initial launch and expansion decisions. This suggests that demand expansion and market learning from competitors’ hybrid model launch and consumer cultivation are very important for this relatively new technology. Further, I find that the impact of competitors varies over time, vehicle origins, and classes.

previous article Analysis of electricity prices for Central American countries using dynamic conditional score models

next article Revisiting income and price elasticity of gasoline demand in India: new evidence from cointegration tests

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Available only for authorised users

In May 2009, President Barack Obama proposed a new national fuel economy program to regulate both fuel economy and greenhouse gas emissions. The program covers model years 2012–2016 and ultimately requires an average fuel economy standard of 39 miles per gallon for passenger cars and 30 mpg for trucks by 2016, a jump from an old average for all vehicles of 25 miles per gallon.

Although brands like Lexus and Toyota are owned by the same parent company, this paper focuses on their own hybrid decisions because each brand has its own consumer base and targeted market.

http://www.fueleconomy.gov/.

This includes automakers’ own official websites.

Each brand’s fuel efficiency and the market fuel efficiency are calculated using a harmonic mean. For a fleet composed of four different kinds of vehicle A, B, C, and D, produced in numbers $n_A$, $n_B$, $n_C$, and $n_D$, with fuel economies $f_A$, $f_B$, $f_C$, and $f_D$, the fleet’s fuel efficiency would be $\frac{n_A + n_B + n_C + n_D}{\frac{n_A}{f_A}+\frac{n_B}{f_B}+\frac{n_C}{f_C}+\frac{n_D}{f_D}}$.

Currently, the CAFE penalty is $55 per vehicle for every 1 mpg under the standard. Some critics have argued that CAFE fines do not seem to be having much impact in the fuel economy drive. For example, in 25 years, from 1983 to 2008, Mercedes-Benz paid penalties 21 times and BMW paid penalties 20 times.

http://www.afdc.energy.gov.

http://www.eia.gov/petroleum/gasdiesel/.

The gasoline price used is the average yearly unleaded regular gasoline price in the whole US market.

http://www.irs.gov/uac/Summary-of-the-Credit-for-Qualified-Hybrid-Vehicles.

National Research Council, Transitions to Alternative Vehicles and Fuels (Washington, DC: The National Academies Press, 2013), p. 26.

I would love to thank one anonymous reviewer for this suggestion.

Bento A, Kaffine D, Roth K, Zaragoza M (2014) The unintended consequences of regulation in the presence of competing externalities: evidence from the transportation sector. Am Econ J Econ Policy 6(3):1–29CrossRef

Beresteanu A, Li S (2011) Gasoline prices, government support, and the demand for hybrid vehicles in the United States. Int Econ Rev 52(1):161–182CrossRef

Diamond D (2009) The impact of government incentives for hybrid-electric vehicles: evidence from US States. Energy Policy 37(3):972–983CrossRef

Gallagher KS, Muehlegger E (2011) Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology. J Environ Econ Manag 61(1):1–15CrossRef

Heutel G, Muehlegger E (2015) Consumer learning and hybrid vehicle adoption. Environ Resour Econ 62(1):1–37CrossRef

HybridCars.com (2013). http://www.hybridcars.com/market-dashboard/

Kahn ME (2007) Do greens drive hummers or hybrids? Environmental ideology as a determinant of consumer choice. J Environ Econ Manag 54(2):129–145CrossRef

Liu Y (2014) Household demand and willingness to pay for hybrid vehicles. Energy Econ 44:191–197CrossRef

Petrin A, Train K (2010) A control function approach to endogeneity in consumer choice models. J Mark Res 47(1):3–13CrossRef

Shen Q, Xiao P (2014) McDonald’s and KFC in China: competitors or companions? Mark Sci 33(2):287–307CrossRef

Terza JV (1998) Estimating count data models with endogenous switching: sample selection and endogenous treatment effects. J Econom 84(1):129–154CrossRef

Terza JV, Basu A, Rathouz P (2008) Two-stage residual inclusion estimation: addressing endogeneity in health econometric modeling. J Health Econ 27(3):531–543CrossRef

Toivanen O, Waterson M (2005) Market structure and entry: where’s the beef? Rand J Econ 36(3):680–699

Vitorino M (2012) Empirical entry games with complementarities: an application to the shopping center industry. J Mark Res 49(2):175–191CrossRef

Waldman M (1993) A new perspective on planned obsolescence. Q J Econ 108(1):273–283CrossRef

Title: The effects of competitors on new product launch and market expansion in the hybrid car market
Author: Yizao Liu
Publication date: 17-10-2017
Publisher: Springer Berlin Heidelberg
Published in: Empirical Economics / Issue 4/2018
Print ISSN: 0377-7332
Electronic ISSN: 1435-8921
DOI: https://doi.org/10.1007/s00181-017-1342-2

Springer Professional

Abstract

Please log in to get access to your license.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft"

Springer Professional "Wirtschaft+Technik"

Other articles of this Issue 4/2018

Detecting which firm-specific characteristics impact market-oriented R&D

Consumer valuation of energy-saving features of residential air conditioners with hedonic and choice models

Analysis of electricity prices for Central American countries using dynamic conditional score models

The real effect of currency misalignment on productivity growth: evidence from middle-income economies

How global is FDI? Evidence from the analysis of Theil indices

Cointegration and price discovery in US corn cash and futures markets