Journal of Economic Literature
ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)
Demand, Competition, and Public Policy in the Automobile Industry
Journal of Economic Literature
(pp. 984–1033)
Abstract
We review the flourishing literature on the automobile industry since the seminal work of Berry, Levinsohn, and Pakes (1995), or briefly BLP. Their work provides a structural equilibrium framework that forms a basis for conducting policy counterfactuals in several key areas of interest: competition policy and antitrust, trade policy, and taxation and environmental policy. The demand side of the "BLP framework" is micro-founded and allows for rich consumer heterogeneity to generate flexible substitution patterns between products. The supply side specifies marginal costs and accounts for imperfect competition. Our analysis focuses on two main questions. First, how has the framework been tailored to specific situations and how convincingly has it been evaluated to generate trust in the empirical findings and policy conclusions? Second, what has been learned about policy issues relevant in the automotive industry using the BLP equilibrium framework?Citation
Van Biesebroeck, Johannes, and Frank Verboven. 2026. "Demand, Competition, and Public Policy in the Automobile Industry." Journal of Economic Literature 64 (3): 984–1033. DOI: 10.1257/jel.20251792Additional Materials
JEL Classification
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- K21 Antitrust Law
- L13 Oligopoly and Other Imperfect Markets
- L22 Firm Organization and Market Structure
- L40 Antitrust Issues and Policies: General
- L62 Automobiles; Other Transportation Equipment; Related Parts and Equipment
- Q58 Environmental Economics: Government Policy