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Dealer Price Discrimination in New Car Purchases: Evidence from the Consumer Expenditure Survey

JOURNAL OF POLITICAL ECONOMY, Vol. 104, No. 3, June 1996

Posted: 19 May 1998  

Pinelopi Goldberg

Yale University - Department of Economics; National Bureau of Economic Research (NBER); Yale University - Cowles Foundation

Abstract

This paper documents the variation in dealer discounts for new cars using transactions price data from the Consumer Expenditure Survey. Consumer-specific characteristics fail to explain dealer discounts, whereas model, market-specific, and purchase transaction variables (e.g., first-time purchase, trade-in, and financing through dealer) do explain them. The results contradict earlier findings of race and gender discrimination based on a controlled experiment. This contradiction is reconciled by examining the higher moments of the empirical discount distribution; while mean and median markups do not vary by race and gender, minority purchases are characterized by higher dispersion. This may rationalize the disparate treatment of minorities by dealers documented in the controlled experiment.

JEL Classification: D40, L14, L62

Suggested Citation

Goldberg, Pinelopi, Dealer Price Discrimination in New Car Purchases: Evidence from the Consumer Expenditure Survey. JOURNAL OF POLITICAL ECONOMY, Vol. 104, No. 3, June 1996. Available at SSRN: https://ssrn.com/abstract=4023

Pinelopi (Penny) Goldberg (Contact Author)

Yale University - Department of Economics ( email )

P.O. Box 208268
37 Hillhouse Avenue
New Haven, CT 06520-8268
United States
203-432-3569 (Phone)
203-432-6323 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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