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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

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

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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.
    2. Lu, Tingmingke, 2023. "Response of new car buyers to alternative energy policies: The role of vehicle use heterogeneity," Economic Modelling, Elsevier, vol. 120(C).
    3. Wang, Kai-Hua & Su, Chi-Wei & Xiao, Yidong & Liu, Lu, 2022. "Is the oil price a barometer of China's automobile market? From a wavelet-based quantile-on-quantile regression perspective," Energy, Elsevier, vol. 240(C).
    4. McConnell, Virginia, 2013. "The New CAFE Standards: Are They Enough on Their Own?," RFF Working Paper Series dp-13-14, Resources for the Future.
    5. Liviana Tio & Purwanto, 2017. "The Influence of Crude Oil Price, Consumer Confidence, Exchange Rate and GDP Growth Rate Toward Sales Number of PT. Toyota Astra Motor, Indonesia," Noble International Journal of Business and Management Research, Noble Academic Publsiher, vol. 1(1), pages 49-54, January.
    6. 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.
    7. Abate, Megersa, 2014. "Does fuel price affect trucking industry’s network characteristics?: evidence from Denmark," Working papers in Transport Economics 2014:26, CTS - Centre for Transport Studies Stockholm (KTH and VTI).

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    More about this item

    Keywords

    Gasoline prices; Automobile industry; Fuel economy;
    All these keywords.

    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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