Premium
THE EFFECTS OF STATE AUTOMOBILE DEALER ENTRY REGULATION ON NEW CAR PRICES
Author(s) -
ECKARD E. W.
Publication year - 1985
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1985.tb01762.x
Subject(s) - economic rent , scarcity , sample (material) , economics , business , variable (mathematics) , state (computer science) , microeconomics , econometrics , industrial organization , computer science , mathematical analysis , chemistry , mathematics , chromatography , algorithm
This paper examines the impact of state regulations restricting entry into new car retailing. The central hypothesis is that these regulations create artificial scarcity rents for existing dealers, which are collected through higher car prices. A reduced form multiple regression model is specified with retail price as the dependent variable. The model is estimated using transactions price data for a sample of over 5,000 Chevrolet dealers and seven car lines in 1978. The results confirm the hypothesis that entry restrictions cause higher car prices.