The objective of this project is the investigation of automobile markets from a competition and regulatory point of view. Due to the relatively stable market structure with a few market entries and relationships with the same suppliers and financial institutions, automobile producers meet each other repeatedly and across many markets, in which they compete directly or because they have concluded cooperation arrangements with other automotive manufacturers. As a result of these interactions there arises a potential for the misuse of market power on the part of automotive players through implicit collusion. The investigation of such firm behaviour requires specific knowledge of the automobile markets as well as econometric methods.
The Department Industrial Economics and International Management has conducted a number of studies in the field of automobile markets. These studies have allowed acquiring the knowledge of the functioning of the automobile markets with their institutional features, relationships with suppliers and legal rules concerning automobile distribution and repair system in Europe. The ZEW has collected necessary databases and possesses the knowledge of econometric methods in the field of discrete choice models as well as structural modelling of the demand systems necessary to conduct the studies within this research project.
The policy implications of this project can be drawn for example regarding the Block Exemption Regulation (BER) for the automobile sector distribution and repair, the impact of which on the automobile market we investigate within the boundaries of this project. The consideration of the linkages with and among automotive suppliers falls into the field of vertical mergers. The understanding of the functioning of the automobile markets allows the extensive analysis within horizontal merger control. This enhances the possibility of contrasting policy decisions with economic arguments.
Besides the possible introduction of an EU regulation in the European car market aimed at reducing CO2 emissions by new automobiles is discussed in this project. We investigate the potential effects of such a regulation on competition and consumer welfare in a concentrated differentiated-products industry such as the automotive sector.
This project is conducted in collaboration with the Doctoral Programme of the University of Mannheim.