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Fashion, Styling, and the Within-Season Decline in Automobile Prices

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  • Pashigian, B Peter
  • Bowen, Brian
  • Gould, Eric

Abstract

Between 1954 and 1989 the seasonal variation in retail new car prices declined, while the annual percentage decline in used car prices lessened. To explain these long-term changes, this article suggests that a rise in the cost of a major model change has reduced the frequency of major model changes, changed the characteristics of new models, and resulted in smaller within-season price declines. New cars of adjacent model years have become closer substitutes as the importance of the annual model change has lessened. The American automobile has slowly become less of a fashion product because it has become increasingly costly to supply frequent styling changes. In contrast, the within-season price decline in women's apparel has increased over time as fashion has become more important. Reasons for the different price patterns are investigated. Copyright 1995 by the University of Chicago.

Suggested Citation

  • Pashigian, B Peter & Bowen, Brian & Gould, Eric, 1995. "Fashion, Styling, and the Within-Season Decline in Automobile Prices," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 281-309, October.
  • Handle: RePEc:ucp:jlawec:v:38:y:1995:i:2:p:281-309
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    File URL: http://dx.doi.org/10.1086/467333
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    References listed on IDEAS

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    1. Allen F. Jung, 1961. "Indexes of Retail Prices of New Cars-Consumer Price Index," The Journal of Business, University of Chicago Press, vol. 34, pages 490-490.
    2. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    3. Pashigian, B Peter, 1988. "Demand Uncertainty and Sales: A Study of Fashion and Markdown Pricin g," American Economic Review, American Economic Association, vol. 78(5), pages 936-953, December.
    4. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1.
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    Cited by:

    1. repec:pal:jorsoc:v:55:y:2004:i:8:d:10.1057_palgrave.jors.2601749 is not listed on IDEAS
    2. John Kemp, 1999. "Spontaneous Change, Unpredictability and Consumption Externalities: a Dynamic Approach to Consumer Choice," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 2(3), pages 1-1.
    3. Adam Copeland, 2014. "Intertemporal substitution and new car purchases," RAND Journal of Economics, RAND Corporation, vol. 45(3), pages 624-644, September.
    4. repec:pal:jorsoc:v:57:y:2006:i:11:d:10.1057_palgrave.jors.2602130 is not listed on IDEAS
    5. Lin Wu & Nachiappan Subramanian & Muhammad D. Abdulrahman & Chang Liu & Kee-hung Lai & Kulwant S. Pawar, 2015. "The Impact of Integrated Practices of Lean, Green, and Social Management Systems on Firm Sustainability Performance—Evidence from Chinese Fashion Auto-Parts Suppliers," Sustainability, MDPI, Open Access Journal, vol. 7(4), pages 1-21, March.
    6. Courty, Pascal & Li, Hao, 1999. "Timing of Seasonal Sales," The Journal of Business, University of Chicago Press, vol. 72(4), pages 545-572, October.
    7. Aizcorbe, Ana & Bridgman, Benjamin & Nalewaik, Jeremy, 2010. "Heterogeneous car buyers: A stylized fact," Economics Letters, Elsevier, vol. 109(1), pages 50-53, October.
    8. Adam Copeland, 2008. "The Dynamics of Automobile Expenditures," 2008 Meeting Papers 852, Society for Economic Dynamics.
    9. Carol Corrado & Wendy E. Dunn & Maria Ward Otoo, 2006. "Incentives and prices for motor vehicles: what has been happening in recent years?," Finance and Economics Discussion Series 2006-09, Board of Governors of the Federal Reserve System (U.S.).
    10. Adam Copeland & Wendy E. Dunn & George J. Hall, 2005. "Prices, production, and inventories over the automotive model year," Finance and Economics Discussion Series 2005-25, Board of Governors of the Federal Reserve System (U.S.).
    11. Lau, Hon-Shiang & Lau, Amy Hing-Ling, 1999. "Manufacturer's pricing strategy and return policy for a single-period commodity," European Journal of Operational Research, Elsevier, vol. 116(2), pages 291-304, July.
    12. Peter Kooreman & Marco Haan, 2006. "Price Anomalies in the Used Car Market," De Economist, Springer, vol. 154(1), pages 41-62, March.
    13. Avner Offer, 2005. "The Markup for Lemons: Quality and Uncertainty in American and British Used-Car Markets c.1953-1973," Economics Series Working Papers 2005-W60, University of Oxford, Department of Economics.
    14. Fiona Scott Morton & Florian Zettelmeyer & Jorge Silva Risso, 2000. "Internet Car Retailing," NBER Working Papers 7961, National Bureau of Economic Research, Inc.

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