Automotive Aftermarkets: A Case Study in Systems Competition

Abstract

As automobiles have become more durable and complex, manufacturers have denied access to parts, information, and training to anyone but authorized dealers. Increased intellectual property law protection has greatly contributed to these developments. This article examines the aftermarket for collision repair parts and the aftermarket for maintenance and repair services, and finds that problems such as consumer myopia and third-party payers keep consumers from factoring the total cost of ownership into the price of an automobile. Even robust competition in the primary market for new automobiles may not inhibit manufacturers from reaping monopoly profits in these aftermarkets. Potential solutions to these issues in the aftermarket for maintenance and repair services may be found in mandating access for independent service providers. In the aftermarket for collision repair parts, a potential solution may be found by creating an exception to design patent law for third-party collision repair parts.