Who is Exposed to Gas Prices? How Gasoline Prices Affect Automobile Manufacturers and Dealerships

69 Pages Posted: 15 Dec 2012 Last revised: 9 May 2021

See all articles by Meghan R. Busse

Meghan R. Busse

University of California, Berkeley - Haas School of Business

Christopher R. Knittel

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Florian Zettelmeyer

Northwestern University - Kellogg School of Management

Date Written: December 2012

Abstract

Many consumers are keenly aware of gasoline prices, and consumer responses to gasoline prices have been well studied. In this paper, by contrast, we investigate how gasoline prices affect the automobile industry: manufacturers and dealerships. We estimate how changes in gasoline prices affect equilibrium prices and sales of both new and used vehicles of different fuel economies. We investigate the implications of these effects for individual auto manufacturers, taking into account differences in manufacturers' vehicle portfolios. We also investigate effects on manufacturers' affiliated dealership networks, including effects implied by the changes in used vehicle market outcomes.

Suggested Citation

Busse, Meghan R. and Knittel, Christopher R. and Zettelmeyer, Florian, Who is Exposed to Gas Prices? How Gasoline Prices Affect Automobile Manufacturers and Dealerships (December 2012). NBER Working Paper No. w18610, Available at SSRN: https://ssrn.com/abstract=2189728

Meghan R. Busse (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

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Christopher R. Knittel

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Florian Zettelmeyer

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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