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Who is exposed to gas prices? How gasoline prices affect automobile manufacturers and dealerships

Author

Listed:
  • Meghan R. Busse

    () (Northwestern University
    NBER)

  • Christopher R. Knittel

    () (NBER
    MIT Sloan)

  • Jorge Silva-Risso

    () (UC Riverside)

  • Florian Zettelmeyer

    () (Northwestern University
    NBER)

Abstract

Abstract Many consumers are keenly aware of gasoline prices, and consumer responses to gasoline prices have been well studied. In this paper, by contrast, we investigate how gasoline prices affect the automobile industry: manufacturers and dealerships. We estimate how changes in gasoline prices affect equilibrium prices and sales of both new and used vehicles of different fuel economies. We investigate the implications of these effects for individual auto manufacturers, taking into account differences in manufacturers’ vehicle portfolios. We also investigate effects on manufacturers’ affiliated dealership networks, including effects implied by the changes in used vehicle market outcomes.

Suggested Citation

  • Meghan R. Busse & Christopher R. Knittel & Jorge Silva-Risso & Florian Zettelmeyer, 2016. "Who is exposed to gas prices? How gasoline prices affect automobile manufacturers and dealerships," Quantitative Marketing and Economics (QME), Springer, vol. 14(1), pages 41-95, March.
  • Handle: RePEc:kap:qmktec:v:14:y:2016:i:1:d:10.1007_s11129-016-9166-5
    DOI: 10.1007/s11129-016-9166-5
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    References listed on IDEAS

    as
    1. Anderson, Soren T. & Kellogg, Ryan & Sallee, James M., 2013. "What do consumers believe about future gasoline prices?," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 383-403.
    2. Meghan R. Busse & Christopher R. Knittel & Florian Zettelmeyer, 2013. "Are Consumers Myopic? Evidence from New and Used Car Purchases," American Economic Review, American Economic Association, vol. 103(1), pages 220-256, February.
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    Cited by:

    1. Christiane Baumeister & Lutz Kilian & Thomas K. Lee, 2017. "Inside the Crystal Ball: New Approaches to Predicting the Gasoline Price at the Pump," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(2), pages 275-295, March.

    More about this item

    Keywords

    Gasoline prices; Automobile industry; Fuel economy;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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