New regulation for the EU automobile industry allows dealers to engage in multifranchise operation, a practice that formerly could be prohibited by the producers in this market. We argue that a likely consequence of thsi shift in regulatory regime is increased dealer concentration. This will tend to lower wholesale prices as producers must compete more intensely to get access to the dealers. On the other hand, dealers will gain local market power which tend to raise retail prices.
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Paper provided by Norwegian School of Economics and Business Administration- in its series Papers with number
13/97.
Length: 33 pages Date of creation: 1997 Date of revision: Handle: RePEc:fth:norgee:13/97
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Find related papers by JEL classification: L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
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