$1,000 Cash Back: The Pass-Through of Auto Manufacturer Promotions
AbstractAutomobile manufacturers frequently use promotions involving cash incentives. While payments are nominally directed to either customers or dealers, the ultimate beneficiary of the promotion depends on the outcome of price negotiation. We use program evaluation methods to compare the incidence of these two types of promotions. Customers obtain 70 to 90 percent of a customer rebate, but only 30 to 40 percent of a dealer discount promotion, a $500 difference for a typical promotion. Our leading hypothesis is that pass-through rates differ because of information asymmetries: customer rebates are well-publicized to customers, while dealer discount promotions are not. (JEL D82, L11, L15, L62, L81, M31)
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 96 (2006)
Issue (Month): 4 (September)
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment
- L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
- M31 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Marketing
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Besanko & Jean-Pierre Dubé & Sachin Gupta, 2005. "Own-Brand and Cross-Brand Retail Pass-Through," Marketing Science, INFORMS, vol. 24(1), pages 123-137, July.
- Imbens, Guido W & Angrist, Joshua D, 1994.
"Identification and Estimation of Local Average Treatment Effects,"
Econometric Society, vol. 62(2), pages 467-75, March.
- Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers 0118, National Bureau of Economic Research, Inc.
- Aviv Nevo & Catherine Wolfram, 2002. "Why Do Manufacturers Issue Coupons? An Empirical Analysis of Breakfast Cereals," RAND Journal of Economics, The RAND Corporation, vol. 33(2), pages 319-339, Summer.
- Sobel, Joel, 1991. "Durable Goods Monopoly with Entry of New Consumers," Econometrica, Econometric Society, vol. 59(5), pages 1455-85, September.
- Sandra E. Black, 1997.
"Do better schools matter? Parental valuation of elementary education,"
9729, Federal Reserve Bank of New York.
- Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation Of Elementary Education," The Quarterly Journal of Economics, MIT Press, vol. 114(2), pages 577-599, May.
- Gul, Faruk & Sonnenschein, Hugo & Wilson, Robert, 1986.
"Foundations of dynamic monopoly and the coase conjecture,"
Journal of Economic Theory,
Elsevier, vol. 39(1), pages 155-190, June.
- Faruk Gul & Hugo Sonnenschein & Robert Wilson, 2010. "Foundations of Dynamic Monopoly and the Coase Conjecture," Levine's Working Paper Archive 232, David K. Levine.
- Drew Fudenberg & David K. Levine & Jean Tirole, 1985. "Infinite-Horizon Models of Bargaining with One-Sided Incomplete Information," Levine's Working Paper Archive 1098, David K. Levine.
- Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
- Caliskan-Demirag, Ozgun & (Frank) Chen, Youhua & Li, Jianbin, 2011. "Customer and retailer rebates under risk aversion," International Journal of Production Economics, Elsevier, vol. 133(2), pages 736-750, October.
- MartI´n-Herrán, Guiomar & Sigué, Simon P., 2011. "Prices, promotions, and channel profitability: Was the conventional wisdom mistaken?," European Journal of Operational Research, Elsevier, vol. 211(2), pages 415-425, June.
- Huse, Cristian, 2014. "Fast and Furious (and Dirty): How Asymmetric Regulation May Hinder Environmental Policy," MPRA Paper 48909, University Library of Munich, Germany.
- Raj Chetty & Adam Looney & Kory Kroft, 2007.
"Salience and Taxation: Theory and Evidence,"
NBER Working Papers
13330, National Bureau of Economic Research, Inc.
- Hellerstein, Rebecca & Villas-Boas, Sofia B., 2010.
"Outsourcing and pass-through,"
Journal of International Economics,
Elsevier, vol. 81(2), pages 170-183, July.
- Hellerstein, Rebecca & Villas-Boas, Sofia B., 2010. "Outsourcing and Pass-Through," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt8098p5nq, Department of Agricultural & Resource Economics, UC Berkeley.
- Hellerstein, Rebecca & Villas-Boas, Sofia B, 2006. "Outsourcing and pass-through," CUDARE Working Paper Series 1016R3, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy, revised Feb 2010.
- Gallagher, Kelly Sims & Muehlegger, Erich, 2011.
"Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology,"
Journal of Environmental Economics and Management,
Elsevier, vol. 61(1), pages 1-15, January.
- Gallagher, Kelly Sims & Muehlegger, Erich, 2008. "Giving Green to Get Green: Incentives and Consumer Adoption of Hybrid Vehicle Technology," Working Paper Series rwp08-009, Harvard University, John F. Kennedy School of Government.
- Oleg Korenok & George E. Hoffer & Edward L. Millner, 2009.
"Non-Price Determinants of Automotive Demand: Restyling Matters Most,"
0903, VCU School of Business, Department of Economics.
- Korenok, Oleg & Hoffer, George E. & Millner, Edward L., 2010. "Non-price determinants of automotive demand: Restyling matters most," Journal of Business Research, Elsevier, vol. 63(12), pages 1282-1289, December.
- Maciejovsky, Boris & Wernerfelt, Birger, 2011. "Costs of implementation: Bargaining costs versus allocative efficiency," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 318-325, March.
- Liang, Donghan & Li, Gang & Sun, Linyan & Chen, Yubao, 2013. "The role of rebates in the hybrid competition between a national brand and a private label with present-biased consumers," International Journal of Production Economics, Elsevier, vol. 145(1), pages 208-219.
- Andrew Sfekas & Dean R. Lillard, 2013. "Do Firms Use Coupons and In-store Discounts to Strategically Market Experience Goods Over the Consumption Life-Cycle? The Case of Cigarettes," NBER Working Papers 19310, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.