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Pricing, concentration & public policy: The U.S. automobile market

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  • Tansey, Michael
  • Raju, Sudhakar

Abstract

The U.S. automobile market experienced dramatic changes in concentration over the six decades after World War II. In addition to dynamic changes in market structure, the U.S. automobile market experienced significant public policy changes in the form of price and export controls. This experience provides a unique opportunity to test the effect of changing concentration on prices and the effectiveness of controls in a highly visible, dynamic industry. We identify a threshold concentration level below which prices converge to competitive equilibrium. Above this threshold, pricing is essentially consistent with monopoly pricing. Price controls appear to have reduced automobile prices while export controls had little discernible overall effect.

Suggested Citation

  • Tansey, Michael & Raju, Sudhakar, 2017. "Pricing, concentration & public policy: The U.S. automobile market," Journal of Policy Modeling, Elsevier, vol. 39(5), pages 762-774.
    • Handle: RePEc:eee:jpolmo:v:39:y:2017:i:5:p:762-774
    DOI: 10.1016/j.jpolmod.2017.07.004
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    Cited by:

    1. Calabrese, Giuseppe Giulio & Manello, Alessandro, 2018. "Firm internationalization and performance: Evidence for designing policies," Journal of Policy Modeling, Elsevier, vol. 40(6), pages 1221-1242.

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    More about this item

    Keywords

    Automobile pricing; Concentration; Cournot model; Chamberlin model; Price and export controls;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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