Was Volkswagen Made a Scapegoat?: A Note on Price Differentiation in the European Car Market

University of St. Gallen Economic Dept. Discussion Paper No. 9804

11 Pages Posted: 30 May 1998

See all articles by Matthias Lutz

Matthias Lutz

Swiss National Bank; University of St. Gallen

Date Written: April 1998

Abstract

In January 1998 the European Commission imposed a large fine on the Volkswagen Group for prohibiting its Italian dealers to sell to foreigners who had been attracted by substantial cross-country price differentials. This note examines whether VW and Audi price-discriminate more than other manufacturers. The evidence reveals this not to be the case and suggests that the company was "unlucky" to get caught engaging in what is likely to be common practice across the industry. More competitive car markets may best be achieved by removing the exemptions from EU competition law granted to the industry by the Commission itself.

JEL Classification: F15, L11, L62

Suggested Citation

Lutz, Matthias, Was Volkswagen Made a Scapegoat?: A Note on Price Differentiation in the European Car Market (April 1998). University of St. Gallen Economic Dept. Discussion Paper No. 9804, Available at SSRN: https://ssrn.com/abstract=93795 or http://dx.doi.org/10.2139/ssrn.93795

Matthias Lutz (Contact Author)

Swiss National Bank ( email )

Borsenstrasse 15
Zurich, 8022
Switzerland
+41 44 631 36 19 (Phone)

University of St. Gallen ( email )

Bodanstrasse 1
CH-9000 St. Gallen
Switzerland
+41/71/224 23 11 (Phone)

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