Primary market and aftermarket competition in the bicycle component industry

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.