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Liberalizing a Distribution System: the European Car Market

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Author Info
Brenkers, Randy
Verboven, Frank

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Abstract

We quantify the competitive effects of removing vertical restraints, based on the recent proposals to liberalize the selective and exclusive distribution system in the European car market. We estimate a differentiated products demand system for new cars and specify a model of oligopoly pricing under the current distribution regime. We then perform several policy experiments: the creation of international intrabrand competition (cross-border trade) and a possible strengthening of national intrabrand competition. Our approach may also be useful to assess the competitive effects of vertical restraints in other applications.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3622.

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Date of creation: Oct 2002
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Handle: RePEc:cpr:ceprdp:3622

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Related research
Keywords: car market; competition policy; selective and exclusive distribution; vertical restraints;

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F00 - International Economics - - General - - - General
L00 - Industrial Organization - - General - - - General

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