DP3622 Liberalizing a Distribution System: the European Car Market
|Author(s):||Randy Brenkers, Frank Verboven|
|Publication Date:||October 2002|
|Keyword(s):||car market, competition policy, selective and exclusive distribution, vertical restraints|
|Programme Areas:||Industrial Organization|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=3622|
We quantify the competitive effects of removing vertical restraints, based on the recent proposals to liberalize the selective and exclusive distribution system in the European car market. We estimate a differentiated products demand system for new cars and specify a model of oligopoly pricing under the current distribution regime. We then perform several policy experiments: the creation of international intrabrand competition (cross-border trade) and a possible strengthening of national intrabrand competition. Our approach may also be useful to assess the competitive effects of vertical restraints in other applications.