THE EVOLUTION OF MARKET POWER IN THE U.S. AUTOMOBILE INDUSTRY*

Paul L.E. Grieco, Charles Theodore Murry, Ali Yurukoglu

Research output: Contribution to journalArticlepeer-review

Abstract

We construct measures of industry performance and welfare in the U.S. automobile market from 1980 to 2018. We estimate a demand model using product-level data on market shares, prices, and attributes, and consumer-level data on demographics, purchases, and stated second choices. We estimate marginal costs assuming Nash-Bertrand pricing. We relate trends in consumer welfare and markups to trends in market structure and the composition of products. Although real prices rose, we find that markups decreased substantially, and the fraction of total surplus accruing to consumers increased. Consumer welfare increased over time due to improved product quality and improved production technology. JEL codes: L11, L62, D43.

Original languageEnglish (US)
Pages (from-to)1201-1253
Number of pages53
JournalQuarterly Journal of Economics
Volume139
Issue number2
DOIs
StatePublished - May 1 2024

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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