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Price Leadership and Discrimination in the European Car Market

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  • Kirman, Alan
  • Schueller, Nathalie

Abstract

This paper explains differences in the price of the same good in different markets. In the authors' model, n producers each play the role of Stackelberg leader on their own market and there is one market with no domestic producer. The authors show that, even without demand differences between markets, pretax prices will be higher on markets where there are high-cost domestic producers and where taxes are low. Evidence from the European car market, based on time series for individual models, supports these results. Furthermore, as the model suggests, exchange rate changes are not passed through to car prices. Copyright 1990 by Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

Volume (Year): 39 (1990)
Issue (Month): 1 (September)
Pages: 69-91

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Handle: RePEc:bla:jindec:v:39:y:1990:i:1:p:69-91

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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Cited by:
  1. Jan Boone, 2005. "Be Nice, unless it Pays to Fight," Working Papers 05-10, Utrecht School of Economics.
  2. Hens, Thorsten & Jager, Eckart & Kirman, Alan & Phlips, Louis, 1999. "Exchange rates and oligopoly," European Economic Review, Elsevier, vol. 43(3), pages 621-648, March.
  3. Irandoust, Manuchehr, 1998. "Pricing Policy in the Swedish Automobile Market," Journal of Economics and Business, Elsevier, vol. 50(3), pages 309-317, May.
  4. Manuchehr Irandoust, 1996. "An empirical analysis of market performance in the car industry," Open Economies Review, Springer, vol. 7(4), pages 327-348, October.
  5. Eyal Dvir & Georg H. Strasser, 2013. "Does Marketing Widen Borders? Cross-Country Price Dispersion in the European Car Market," Boston College Working Papers in Economics 831, Boston College Department of Economics, revised 04 Apr 2014.
  6. Thorsten Hens, 1997. "Exchange rates and perfect competition," Journal of Economics, Springer, vol. 65(2), pages 151-161, June.
  7. Irandoust, Manuchehr, 1999. "Market structure and market shares in the car industry," Japan and the World Economy, Elsevier, vol. 11(4), pages 531-544, December.
  8. Goldberg, Pinelopi Koujianou & Verboven, Frank, 2001. "The Evolution of Price Dispersion in the European Car Market," Review of Economic Studies, Wiley Blackwell, vol. 68(4), pages 811-48, October.
  9. Boone, Jan, 2002. "'Be Nice, Unless it Pays to Fight': A New Theory of Price Determination with Implications for Competition Policy," CEPR Discussion Papers 3342, C.E.P.R. Discussion Papers.
  10. Jan Boone & Delia Ionascu & Kresimir Zigic, 2006. "Trade Policy, Market Leaders and Endogenous Competition Intensity," CERGE-EI Working Papers wp311, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  11. Guillaume Gaulier & Séverine Haller, 2000. "The Convergence of Automobile Prices in the European Union: an Empirical Analysis for the Period 1993-1999," Working Papers 2000-14, CEPII research center.
  12. Boone, J., 2004. "Balance of power," Discussion Paper 2004-021, Tilburg University, Tilburg Law and Economic Center.
  13. Guillaume Gaulier & Séverine Haller, 2003. "Les prix automobile dans l’Union européenne : y a-t-il eu convergence depuis 1993 ?," Économie et Prévision, Programme National Persée, vol. 157(1), pages 83-96.
  14. Abdulnasser Hatemi-J & Manuchehr Irandoust, 2004. "Is Pricing to Market Behavior a Long-Run Phenomenon? A Non-Stationary Panel Analysis," Empirica, Springer, vol. 31(1), pages 55-67, March.
  15. Yves Bourdet, 1991. "Pricing policy and quality upgrading in the Swedish car market: Do import surveillance and exchange rate instability matter?," Open Economies Review, Springer, vol. 2(3), pages 255-274, October.
  16. Bode, Eckhardt & Krieger-Boden, Christiane & Lammers, Konrad, 1994. "Cross-border activities, taxation and the European single market," Open Access Publications from Kiel Institute for the World Economy 799, Kiel Institute for the World Economy (IfW).

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