NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Automobile Prices in Market Equilibrium: Part I and II

Steven Berry, James Levinsohn, Ariel Pakes

NBER Working Paper No. 4264 (Also Reprint No. r2064)
Issued in July 1996
NBER Program(s):   IO   PR

This paper develops new techniques for empirically analyzing demand and supply in differentiated products markets and then applies these techniques to analyze equilibrium in the U.S. automobile industry. Our primary goal is to present a framework which enables one to obtain estimates of demand and cost parameters for a broad class of oligopolistic differentiated products markets. These estimates can be obtained using only widely available product-level and aggregate consumer-level data, and they are consistent with a structural model of equilibrium in an oligopolistic industry. When we apply the techniques developed here to the U.S. automobile market. we obtain cost and demand parameters for (essentially) all models marketed over a twenty year period.

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Published: "Automobile Prices in Market Equilibrium," Econometrica, vol. 63, no. 4, pp 841-890, July 1995.

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