~ 7-{ z

COi>l:\lE:\TS or FEDER~L TR-\J.)E CO\J~nSSIO~ST.-\rr

0:\ SE~ATE DILL 103 //

'I r C"a;l'll'31' "'l"~ 'l''''ll''e''s -...: "1'" <:"'I''''t''' C")l"'~'Jr"'" ("1 H,,:,',,\,,,\,c'.,... J..... ..." ... Lot 1V ........ 4 '-'... ~..... 1 ~. '- J'-. J.f~..... ... ......... l\.,........ (=-,1 \ 'L .....

The o?i:1ior,s J:1C Views ex?~essed :,e:-el:-l ;ne '.!:(;..;~ (If '.;1,;' "l,~, I ,,; ',,:,,'

Clcvclalld Regional Office and tl:e Bureaus of C:)~l:retltl(Jr:. C(.·;n,)~::l:er 1>:· ··~e::::.. ",

, ,SU::r:liL ~.lt:Sl· Cj.)TT1:Tl\.,;;~L~ :t";

i .- -: " .,.

distributors.

the existing frcinr.:!":isc stCltUl~S inr.JhiL ~()mrC'~iLi()n :.lilli, i:l su l.Ln:;g, ;~!]";i.: ,:::<,'

for consumers. SB ~03 ap?ears li~el\' :0 com?cund ~he ;ml;-com!,~~il:\':: :::"-;'':'"

uf lhe current lawS. Therefore, w(; urge t]13t tll.: 3me:lcime,lts cor~t(line'~ :::

SI3 103 not be auopteu. Jnd \\'e re:.:om;l1~nd [}j;Jl yuu iT1:-'lC~C cun:-,iL!c:- k~i.'~:IL!(;i:

lhat w()uld rCjJc~l the eXIsting stanltes.

The FTC lS charged \vlth m<Hl1tCl1111ng ci.lmrctilion i1THJ pTlJll<lJIIg Ll;J1~L.!;:,-~'

;ron1 restrai:1ts of trnde.1 In (lcc()rdancc with this role. t:1C FTC ~ll1d :t~ S:;l,:"

submit comments upon request to feder:Jl, slate unJ lucal gU\(;rlllJ1Cllb T.) ;;(";:'.

ZiSSCSS the cOl;)pe~iti\'e and C()ll')\!~ler \\'C!(diC imi'iil'cl[iun::. (,f ;.:>enc:ing re:;,.:::,:r: \'

i nitia ti Yes.

ill IS USC ~ 41 ~ lDI.'

has ~aineG substantial cxrCrJC:lc:: i71 a:la:yz:r1g ::1C l;1lrac< (;:" ":-\~lCI.::5 :-cs~:-~::::s

on competitio:-! and :~e L:()sts d::l: D<::ldiLs i,)f 'j,"c:n ,C\Lr:..:.;r;h ~lJ -':·);1~~:::CI". I"

recent ye~rs, ,l1~ FTC staff I:~s L"cen uivciveu ;~ ::t;r:1::':::r .;: :s;:l;e::. s::,=c::~:c::>"

- .,;u:-- \... .\::I:l~;I ....·. ~ .... \...

fTC's Bureau of Econcmics pu~;llshed the results or ,l stuJ\, (;If :::e 'ElI'C; ,1'

Sr~;je Emry Rq.;u/arioll Ull Re:~:.;:'l Al<TUlIlOin!e .'f.::,.;';':rs."2

Tht Exi~lin~ R:\IA Laws und TheSt:nult Bill 103 Aml:ndml'nt.... HLlnn COI1~t1I11(.:r.,

;;;: -. ~.•. , 1 ;-,- ~ .... :--

rclccarc dc2.1crsi~\ps r:1usr gl\'C w:-::tC:l! -:iO£:c: ~(\ n!! l:,\i,-:,lir:; ,~~,:;~T) ,;;:1.::-:::

v<:hick's uf tht' saDe mu;";'e '.\,::::::1 t::e retev::l!:r n:;nke: 'H'e::. ~OJ:::..:: ~~';, C~:~2

§§ 451i.Ol(X), 451i.50(A).] 3 A ":-~;~\'3::r n:;u:-':ct Jr2a' is deL:',,:-;: '::5 :i:',:: ~'.;"'::::

whhin a radius o( ten miles (rem :lJc SHe or the proposed 7i2W J~'a:('r ~O:ZC

2 \Ve are D[Oviding ,lle C:)mminee \\'Jth ;1 capy vi {lus Sr;;:f Rei)on(Attachment 1) for your inform:l:il)n.

The term "motor VCllIC!c" is dcfin.:.d ~n Obo Re\', Code 3 ~501.OJ(B) ~nc

includes ot:le:- seif-D[CDcJled vcl:ic:~s, such :1S ::lOwrc\,c!cs, :~:~!lufJcrLlrcj hc;]:~c;;

"nd recreatwnal vellic!es, In adc:7ioll lO :H!:omobi]Cs '2nd tr;:;:k,;;. Our CCl1';jr~':":,ccncerning the anti·con:;:)(~r;{ vc :l:1:',irc (wc cff..:c:s cf Jllui-:.::r r2.S;;-~j:n; ~~r~")~ \,c .... ~,ie •...., t~,p.s(> j ....... ,-..t,-..r "C "c~·-'s ... - \\'c:l"r1!=,1, .1v. Lv Jl¥ ~ •• v.v ••. ¥ ,.;;, .,

'J ., ~'1 , ,1.... ~ ... ~ .. ' ~ .::..

? c l' 111i ! , illg : II (: CS ra b1ish 1ll CIJ: ~;( <l :) c \\' ~_L: :J j l' ;- -:, j T'.~T

cxislillg om.:. (ORC ~ ~5J~.5j):

\"'\. "'".'- ..., l)'-';-~ 0"' .. '"" .-~./.. _ ~ l{ ......... 1 .....

. " "~

.", ~ (~ .....

sp~ciiiC' grcum:':i fer ,he eS:Jb:j,:;l;::~-('J:: 0f rc:!,xJ:~':n :)1' ,l ,1:::11:::.:-:::::- ;:~

lJOt.ificatlO11 to ':>..i:-.ting ul';.:kr'>, ;;::d :0 enF r1:= ~u:·~j~:1 uf ?,::::.)f ~.::

',' .

.\ The rc:h;vant !Tl;Hk,:l ,Hl''-l (Ilr ded!::rs 01 :::'Ir.~::':C!l.;l"ed :lO!"r.~S crrccr~atio1131 Vcllicies is cJcf:!'1('c 1"1y n L1Uius ni :we~ty·fi\'e I:lile').

~ SI 'tl'(J- 11 j'::~7 ~1 T)r()V1U~S J. ~j"t ()f t'l'··(·r .....· r() l...;:;. I-,·'r'll··'j .. ··e(~ '~nl01l(1" OT.1,.I(':o.~.;:. :.':'- -~_.~. 1 "'1' l( ..;.}.'" L.. ...." ,;,1 ~1 ;:- , .;) ~~.

detcrmll1lng!I good C:lUSC e:\lS~" The":: lnc\<:,!e: (:) t::e e:;ecr GIl c~ ~2~:',l:

motor veillclc business and th~ L'nnSUnllnc: public in ,11e rdev~ll1t m:llKer ,;:',::~

( '"') .\ tl'~" t 1 (> cst"'bll'sl' l'C'" ( r,l"-.,,, ,- -·I'··l "I, -,- ..... , ..-'~ ,.,;; '.- ~_ \\: 1e '':''. ,1.... .. ...',J' ~'l Jr .(;l\.c,,(lnn ,'J <l \Je~, .... r '." ~:l!dll,.H.:> O. ".e.:,,-,c .. '.'0 ·'le p'I"I'e "l'eres t ' (') \\"'·"'1'- .J,. ~\ .. (.- T .I~.\,~_,_ " .',,,, ..• ~~~ -,.:-, ." - .. ,~ L... \. .....,,"' .... .I.!o. ... ~ _ l~ClJ L.. l,.l,; l,:,,~ •• I=- ..... ~ ..., \..1 4 _ ... ~ ;:'.~l.lo .. \'" ••••• : .... l..: .... , •• \.

rekv~l1t :n~lrket ~H~~\ ;'Ire ;)ro\,jJ:!J~ <I12C:":U~II(; C~~nln ,:ti;:;, ,J;-,d cup.\e:-::':l::

CO!1sur:-:er care for vchicles: ;,::d (~) \\';~c~·h~:- :~C\' '\Jr~ j:::\;~::::~ ~:l:e::·.::::~ :::~~:-~:~:per. e t j il :: <; n ;~ nd re ';:'l resc !~ : :1 t : c, r..

. .., -

.: - - - - ~ -- - -

, ". _... ~­. ~ ,~,-.

competition 1:1 rd~:; rr.~)tor vl:nic\: i1':<..lrkcl." In O)li,i. illl": SB :{;_~ ~l;;;l..:::~;::~;::~

"...Quid i~'l:;;:nsify rhe al::~·c8mi)e::tive JS~~eC5 i)i' !;1csc laws. -:-:1ec;;:: :0J;C:-,~.:;:-;.~~

Such pncl: increasc~ rc~ult frum the rc~lr<'lint l:ll; R~L·\ ;a"" :.'i~t,-;.· ',:;;

t'ret:::ullT!l lo ()fJt:n T:~W J<;ul~rships. By lirniLing m<..:n~(:JeL'.lr\::-s' (;-'-.,: ....;\):.: l

:ncreasc :11c C8S, of c:saisuti::g 3utcmoGiics ;:\nd thcreby f3.::::':\:~ ::scs :::

few\::, Jl'~;(.;rs an()ng '''':"1()i'Tl L,) snup for h..:tLcr r:-iccs, ~\nJ :T.:l)' :'in;,,! L:-"'::'

travel f<.J.,thcr a:lu ~Xr)(;J,u mnl' l:mt::: in th<: cm.:rse ,if lhe;r sh()f'7'~:;~,

6 These pnce incre::lses are most lIkely to occur in counties or 1::2::C:-:'2.: :::::are3S experier.cing <.l g::-c\V.rh in population, The rC5ulcs of :~lis FTC sr.:::; ~~~~.

consistent with other s:uGles \\'h1C11 show increased prices ;-csu]ting f,()!~, :-\\f.-\Jaws. ill Eckan.l, E, \V., Jr., "The Ejfe::-r.~ oj Srme Awml10hiie Dcaler EmryRegulmirJrlJ on New CClr PriceJ." E:"':()fwmic Tn(J\liT'v, Vul. XXIV, ~o_ :2 (Aprij1985), pp, 223-~2; and Smith. R L., "Franchise Regularion: All fe-o/lomieA.lla/vsis oj SiGle Res/rieriolls 011 A.//lomobi/( Dis:ribillioll," ]OUrl';;t! ,)! Ll\\' ;lrr"~

Ecoi10mics. Vol. XXV (/\.;)ri1 19H2), pp, ]~5-:i. Ohio expcric:;e~d vlrmail)' 2;.';~;population growth hetwe~n 1075 and 1')84. \Vithin Ohio, ho,,\'c\'cr, there 2f('

many areas that have expeneneed popui::ltion increases. It is within tbe,e ;;:::;:"that RMA Jaws arc more likely to increase ,he price of 3u:cmobljes. !:;addj[ion, future population growth will tend to inerc3sc tbe effect of R:\'I.\ ::.:.\,,~

Sinc~ the reJ\:::Jse ()f lnl: BUfl·J.U ()f EC~Jn()m ics Sldf[ RC;)()rl, \YlJ<.1T ll;::

Econometric Forec::lsri:;g ASSOCJ:ltcs (\VEFA), ;l[ the rCi.jucst \Jf the ~a[]()n~;:

Automobile Dc:alers Associatiun, has pf<;p,Jrl:d iJ fr;pmt lnul rcvi(.;\\s lh-.: S',I';Report and c::;:dlenges its conc1lJ~i()n th,lt rric~:; of ;-lut(jr.;,OC:I~cS \\(;uld :-;,,~ ..:~ ;:result of R~'1A L-l\'.'s in ;lfe<lS rJf growing PUpuhliun. \Ve ,:1:: pr()"l~:~r;z ',::.;Committee with the staff's response to rhese ch;l1Jen~es (.-\::i'I::1fl;e::t :.)~ :<;:::'.of the \VEFA G:~lcisms. ;11'::: showl1 to ~e inappr:1prJ;1Ie ;\n;: r:1J:sl::,;(:i~;. \\'l:-.-\'.)"pec'l!·-'t'on ·:'·-'t rl'e St'i~· R"PC)11 h'ls f~"''''''''''''C'-'l,p'l "nl" l"'" .-, n';', r'" ._-.. \" (,., J. \'1{~ .. '........ ,\,.I.. .. J. • .....,.J,Jt.!~......... \,.; ......... 1.'.-10 .. ·J 1 ,.(. •• : 6.'.1.\ ... *-areas Juve higher dutomobl1e prIces is snu'.\n ~u be unluunJ::J. -

entry of new

dela)' rJ:c ~~r~iblishmC:Ilt u[ d l:~\\ uc:a]crship by as 1IlL:L:~1 as ::,1.\ :1l(;J:~:lS L;!:Cc.:~

(.·Ufri.:;'1l pruv;sions. Bl'L:aUSl' SB :(13 \\()t..:.kl \:Xl"::lJ Lh<..' ~1;;;-: \\ :::~ln \.... ~:cr. ,!

~""'11··l~, "'1tIc;n"t,'d 'f .I'IS t~111 n"'SS'$L: v \,. \..' \",.:.... t..... 1 ;-' U "'"" L ~ ... ... J. r l.. \...

c:xistJrlg dealer }ws an 0r'J'lc)rtuni:y lu nl:g()l:'-1ll: ,:onCl:S)l()r:.~ :~':;m ;;:e

mur;ufuct·...:.r~r in set:"lemen: d tr:e protest. Tl:e custs 0: S::C:: ~~el:.:':s :\1:(

-'-'C" ... \..- ' ..... ~ .

..=. ... ',~ ,-~ '-.. \ '-.... '_.-

R(lther :118.11 passing SB :03. we rL'Cllm::lt::-::': ~.n;lt ... ~",... ., ,+ ~~ ­

..... ,,./ ~ .. ::- .. '~, ..... -

repea1::1g the currea! R~lA la\\'s. Exist;ng Q(·,::-.:rs arC' T:;: ::'..:e:y L.' -:-c ;:--,::: ~.:

hy i.;'e r-::;;eal uf these laws, c:x:(~:): \\hcrc ::;\... :::,,"'S ::;)\C ;"",-,:-~:::;:,.: <:;-'::.'

CUI".1petiti\'e ?rofits,

111 such? l11<lrket.

1Il r~al ~statc:, inventur;' and personnel to req'..J:re c21reful C(;r:5:~1e:-~H!On of '.'.)::-.:

th(; mark(;t can hear. :-'1Clnufac!'drerS will likew:se avoid ::;vc:-·satura:ing 111 3.

market. They have an interest i!1 sHong, stC\L;lc dC31crs, \\'cll-cst3bl1s;:d 1Tl ::-:C

cor..:mL::1Jty, whose goudwill \viE 11clp sell the proGue£. !=\lr:l:c:-, if ;)

In a :lll fa c: t u rergaj 11 S a ft..: p u 1aLi 0 n f lJf t r l: ali :l g l:.\. is tin g ul' ~ : ..: rs h~l(.l Jy, ; L \\ 11J :-- (;'

'; \V~ r.()l-: lhal th::: SH 103 <JHJ<;rldments :u the "good CL:se :~lcur:;c:numerulcJ in Secll\Jn ~::L~l 'lnd n.S ;lhu\'C include ddeli~g t;1e ef:e:: en !;,

reTail moror vehicle vusiness and rhe cOIl.5li!1!illg j)/lb/ic ill rhe rdelan! marketarea" and adding the effect en "rhe ('Xi.5lillg 1/('\1' mOlOr ,'i:hi,';'t (hule,. uf rht:same line-make in rhe re!cI'QI1I madel arm" Alrl":cui:Th § 4.:T:-.~1(13) :lS:S

'\v~e:her (t~e action) lS injur:ous or benef:ciCll t/; the pu~~ljc J:1tcrcst" 3S .J.",,()(),I ••·.. Ij".., .. ["'-'lor ()m'~tI·r.('T ret''''!''''r.-e·o ti'e "'r';""ct 0'1 .:,"" ~:'l'1Sl'"':''''' ~I':'.'!:o U I.,.. oi.ol u. '-' " .. .. ~, .' - .. t '- .. \". 1 l '- '-' .. • ~ r" ._nl "'\' j'M"\n!\' I'nat cn!l-;umer \\elr;ne i'3<:'les \\,1'1·-:1 '\'e 1,C~''''\·'~ ,'··",,'c !,~ r·.' .,' .-(.1 '" J..4I.-1.... - '" . I. ~ ... \... \ v................ _" .......... ,.. _.......""

cancerr:, n:-e not Imporrant.

- :S -

difficult to find ?e~ sons who arc: \vJl:::lg tel ;n~1kt slgnifictEI (~ti)l:,':~ :::VC:>~::;-'::: ..'

in s~lcs ancJ 5crV:C;:; facibties whell he :l\':cc rur ;H':W JC::..li-.::-s <.1;:~I..·s.

\Vi!;10ut dee res:~·2.iJ1: :;1<1: :J,e 1\.\1.-\ :<"1\.... 5 !~!:1(':: c:;} t!:~:;· ::~':l;t:- ::) :::-:<.:

\.:~.)f71retitjfJn. r.:ar.ut"a::urers can be :llC:'e reSpcES,YC to C8:1s~;n:er d.:::::::::::':.3.

fear that remcvir.g R\'lA L1W5 \\':~l 1:2rm CO:1SU:::C:-S '.':' :o"l.. e;,i::~ :::.: ~'..;:c::::

:c:dcr se:\'ice is u:lfol.lndcd. CClJnpct::icn froP,') ck:J-:;~ C~[ (,[hn rr.:u::'..l~<jc:'.::·:::~

\' 11 I'ns"ur" 'h'll cllnsu....., s -"eel'v" t\...., nl;x "t' Sel'\'l'''''' """"l;~\' ·...,'1".,···'· "')..-'.'J •. ... l" .. ,.1 ,... • .l .. 1 .. oJ ~ ... '1" .... ",' 'I' ."... : '" '-

pr:ce they \va nt.

The E.\islin:l Ttfmilll\{iun Pruu:dun:s .-\ndThe Staatt: nill 103 Aml:ndmcl1Ls Hinoi:1' TheDevelopment Of Effid~nt Distribucioll S~S{em5

seck preliminary anJ permanent inj";~leti\'e rcLef :n 5:2.:::: C:)u:-:. ~OH.C

~ 45i754(C).] Under SB 103. dealer ter!111!13,tion disputes would h~ he2:-d ~\:

).1otor Vehicle De~ders Board, which wDuld h~ [t>quired to commence a ;l~2.!,::jl!.

within IRQ days of lh~ JeaJ~r\ protes~.

Like the 1\.\1.-\ laws, the tcrmin:1tlon prOVlSlons ()I :hc existing "t,llut;:

SB 103 may d~crc3.sc the ability uf manufuL'lur~rs to ~st;Jblish emu P.1,:intai:1

dfici\:nt uistributiun systems. Termin,ltiol1s may be based on the d~~kr's

failure to satisfy consumer dem~nd5, resulting ill poor saiC'<;. POOf service. :,:-.,~:

consumer complaints, or !llJrket conditions may indio.Ie ,hat [c'.vcr dc:tl'rs

would make the distribution system more efficient. The notice and hCJr:i:t:

provisions in the current Ia'~' Clnd the SB 103 amend:l1cnts !'el11on~ the f!cxj;~:~;:>

.. =- -

...,• i ..

=--- --- _.'--_#--- -- ------- =

necessary to

A.s [\ resu:t.

. .... ,.,., ·l..c .. \s·e·..... .., ~,.,.<:~O s·' .... ., ,-h"I''''''" ;11C:1 a_J,:, \... .... J ., ~' .. L ,.... : _1 .... \,.. -' :-' ..... I.. \ j U. '- H (.I .. =- ~ .....a ~ - .. ~ -"- ! ; ..-d· b·' ·.. t"' "'nd TIl·' .... "::, -r"r"r" "~. f'),.. .. D(l to' .,,,,\. r l.

!' ~1:,r~-..>r ".---1Srr 1 U ~ j () n. 5 ~,) _ .LJ , (.\ l. U. I v .. ,,~Io,.. 1.... '" ~ L • .;. L \., \.. ..........1 [" '- ~ r d \".. ~ 1=-........... \.. v.) .. ,:,

;:.ssoci~~ed wi~~ an ineffice:lt 5:- Sl(;!lL T}-:c::ie in:.:r~ascd C(lS:S are llk~:\' :,-) ;~.s~;~:

111 lligil-=r prices for consUr:1~rs.

Conclusion

:n Obi:),

. . . . . .c~)71:}le~l~lct: lj~ ;t.:~:·li: :-.:~..::c:- \'I...:.~':"·;:': ::::::'::~':.:'"

" -... ~bdicvc t:'at elirnin:.Hlng ~he (Uric:,r :>t;,:tu~ory ::H'O\'lslons w()'.:ld b~l-:cfi[

cor..SUrrlers. and we urge you :0 (;::;nsiJc;' tl1Cil' 1'(::.)(;<\1.

'l The c!cvcn-me:1:bcr :\1L;[()r \'e:1iclc Dc~krs Dl)iUd. whic:-t would he:H ~(;';::.::

terminatJOn disputes JS we!] (lS enrry pro{.;sls ~ll1dcr SB 103. conslsts ()r tJ1eReglstrar of ~fotor Vchlcle<; :md ten InC'mhers ;lppoinrc-d hy the gOVl'rnor 0:these rell members. se\'en :nuSi. :l:-l\'C lxcn ~ng,l~cd in the :l~()t()r \'-=hic!c r.c:s:::;;s'- five in selling vehicles 3t :ct:lil ;lnd :\\'() in \'~hicle lcasiliz, Or.!\' :~;:'C'2 ,.,(the ten <'l"Jpolnred members ~\r~ ::~ )t~ec:Lc.:l;1v rCDresellt :J:(~ ;J~8l:c. ~~!lC ::J ....".may not :1avc he~;'l er.g0.~'2C ;" "e:!:~.g :~:c:tl)r' \-ch':e!es ~r ,::::2,'): iO:ZC; ~.::--:..~Janufact~lrcrs and (.hs,not::c;rs :Jr:: net leprc~cn{i,;d Oil the DO;I~d.

Ohio SenateSra:eMC'L;3~

:o:u,.~::):;s. Ct"'~I~ ~2~~5··:5Q~

Q~.1,450-aC82

:..'. ," . ,~... -:.:. .. .;, -.- -~_.

,"I .:: .'S'--;-'

Cooper Snyder14:!l Olatrlc! G:'

I ,

It .:l..

~r. ~ichael ~ing

F.; de r a 1 7 !' '" J c Cc :-r.l':l i ; sic :-,11S St. Clai=e Ave~~c

Suite 500C:ev",l.::ll\;l, ,..... . " .. ,

\..'nl.C .... -..L...:,.4

~ :~a.'.;.~;t t~Gt:':':>':':1Y rrc~ ','01"::- ~~';l:_~:~:-:-:t:=t~:: -it=:, ~ ~.'''';: '..:1 c;~ ~~('."'-l:= 3: __(notor' v~;~l::2.t: ~~Ltl:::.;;c:cr:·J.r2:-:: ::::.:~r .J"::' re~:'~;.':::~::1e:--.~ ..: .:~."';Y :--lC~.;:':~~~~.

:. ~.;:) a::~':'~~ ':.;io.: ':0\.1 c:..)l:\::·.\Jl'.:"':~:.a <i:':-2C:~~: ... __

:c- f=';:c:i:>l:'sr: ::.::l.2r ??P~·:~!'.:1n~-~ ~:()::.:~:

, ­-~

;;i \'::'81: =0 ::~:t: ::;(~:"ncus .. ,C~ai=rr~n T~ci ~rg~'s 0i~~~~

~~74C00::lIH S:1Vce~

S::.::.te Sc:i~.:cr

CSf ~,'i

cc: ':'he ~cnl~:f4;'l.~ :cti C,,::;];, Ch~:':'=::l~~:l t t-: 1..;;1\.~';'YS, 7r.):"ls::·:'rt~ti=r:

an~ Local Go~er~~enc

The Honcr~~lc Eu?e~e ~d:ts

- :. - -:--.-:. =.-. "''':''- ":,,,-.-:

A Response to Wharton Econometric Forecastinl;: Associ:3(cs' Commentsonth e Bure :l U 0 f Econ 0 m i cs S (u d:: 0 f ReI e \ a n [ \ b r k ct ,A r C:3 L:3" S

entitled "The Effe'cts ot" S,:lte E:it~y Rcgul:ltj,Jn J:1

~ .: '.\ ::." "

:! n d :l" ri r m 0 u r ~ :l r lie r CJ nc:us ion : h :I t R. ~ 1oX l:l" s nJ ',' e :I :- =:; I ~ : '. e :::! e::: ;:. ::

into ~~rc:: ~ ~ , r"\ ~ •\. : t- .

to Jny econome,rlC Jr,;:llysis. thJt ,.. ......... , ,_ I •

_ ••. - • I I j .'

investigJted to sec if (hey CJuse chJnges 1[; the cone::":5;'::1 :~, c Sl:':':'

?;c~J.rcd by ,-\lJn \1:1::':05, 5l.1!; C::::'Ct:lICl

Economi:s. Feder:ll TrJce Cor.:mission.

~ \\'EF.A. ".-\n EV3JuJtion ot" the FTC's .AnJI\·sis 01 t:"'e ct':'::::::: 'Ji' R..\14,L:lws on ,Auto :Vbrkcts" (JJ[;uJry 198'7). The WEF,-\ report ·).:l5 ;:ore:-Jr::::: Jtthe request of the \i3tionJI Auromobile De3!ers Asso.:iJtlon.

3 5 t J tere Ie vJ n t m3r ke t 3 rea 13 ',l,' S j n ge ne r3 I g ive e\::; lin g f r J nchi se j

3utomobilc dealers a right to ch31lenge est3blishment or rc:x:Jtior; by theirfr3nchisor of other dealerships within a cert3in disDnce 01' their reIC\'3ntmJrket :He:l.

4 In 3ddition to criticizing the 5t3ff Report, WEF.-\ JddreS5es polic\'re3sons why RMA laws m3Y be desirable and discounts 3rgumenlS th:1!suggest th3t these 13wS '..,.-ill impose COSIS on socie:\'. The ;:s~e ot' whetherR!'.1A 13 ws r:l ise price, however, is 3n empiric:l! one. Thcr::;cre, w~ do notevaluate wEFA's comments regJrding the policy issues bu: rJther focus onthe c r j tic ism s 0 f Ihe ecan 0 mel ric mod c 1. \\-' e no le, howe'" e ~. t:13 l lheW EF ..l,report provides no empirical v31idation of its view Ih:!l R\lA !:lWS cenclitconsumers by IC3ding to higher quality service.

Report, Jnd 3) comments thJt CJnnot be 3Jdrcsscd without Jdditior.:Jl ·':J;2.

some of which C3n be 'JbtJincd only (rom the JUto de3Jcrs thcmsc;"c~.

Before discussing c3ch ot the thrce t\,pes of .:riti,:isms (Se:tions II. Ill. Jr.C:

I V respe:t ivel y), Section

R;::,ort. Sc-:tion \. con.:!udes

I. The St3ff Report -'lodel

:hc 5t3ff R.eport Je'.elopec J model ot' suppl: Jnd demJn,j Cor ::c'·'

Jutor.lObiies. uSing 19-:-S cross section d3tJ 5 Unlike models dc\'clcpcd ~:.

others. tlle StJfi Rc;)ort model tJkcs Jc:aunt aC the possitiiity ':-:J,

11": p3rt due : 0 d i1i- ere n t CO;) d i t i 0 fi sin I 0:: :1 I J. ~ t0 r '.. , ... , ,.... ~ ..J ••

Jny iniluence by JUto de3lers.

!J \\' S depen .: i ng 0 n 'w' hethe; 0 r not the reg ~ 0 n 1sex pe :- 1en -: ~ r:; J. n ::"'i : ~ :: :. :, .~

popu!:1tion. This 13tter consider3tion is e:urcme!y impor:3;l!.

restrict entry ot deJlers into :lfe3S where there IS zero or ncg},;'.c

popu1:ltion growth are likely to h:lVe no eCCect, becJuse in thJse JreJS It ;s

unlikely lh:lt manuf3cturers would find it :n their Interest to stJrt ;} new

de:llership 3ny w 3y. Therefore, an econometric 3nalysis th:H docs not

s This model is similar to the models of Smith J.nd EckJrd. SeeEck:lrd. E.W., Jr. "The Effects oi St:lte Automobile DeJ.ler Entry Regu!3tiononNe w C:1 r Prj ccs ", £ COli 0 m IC III q IJ i ry , V0 I X X JV, No. ::, (A prill 98 5), p p.::::3-~=, :lnd Smith, R.L, "FrJnchise R:gulJ.tion: An Economic An:llysis ofStJte Restrictions on Automobile Distribulion", lVI/mal 0/ Lalli and£ C IJ II ()" 11 C~. V 0) l\:\: V. (A Pr i I I 98:: ), p p. I:: 5- 5 '7

distinguish cetween :HC:lS with nq;:ltivc :lnct positivc growth is like::- ,0 :'nJsk

some of th~ eff-:::t 01 R\1A l:lws.

The elf c:; t ,) I' R \ 1A l:l wson the p ric C 0 f ::lU: 0 moe i icSIS cst j m:lt cd: rom

the ;::>rlcc (supplyJ cqu3lion, wi~:'in J muitlv:!rIJ!e fr:!;T;c:-l,Cri-:. tn:lt :lc::,un:s

Iwr the effects of VJrJOUS (:l.:tors on prl.:e.

popu 13 t ion gro'-,th, t " ,-" ...

.:: 0 n.:: Iud cst hJ tin J rC3S C \ pc r : ::: :J :: 1n g p ,:) p U : J ~ 1eng rc '.'. t :-:, R '.1.-\ ;:1"" s :... :: .. c ~

l:lrge 3nd st:J.tisticJIl:; significJnt positive errc::t on the prIce 0i JutO;';0i..;:~CS.

This is the conclusion thJt \\EFA c!:lims is in\'3Iid, cecJusc 3cc:::rcing to

"\·EFA. L,:: conclusion results from :l misspc.:ific3!ion of thc su~ply ;,;o':e;.

II. "'EFA Comments on the Econometric An:l!ysis

\\e 3ddress first \\,[FA's Jsscrtion th3l the StJff Rc;:,crt's :::::.):10:-:-::::rl':

In::J1ysis hJS specificJtion errCiS. This is :l rel3tively C3SY ::i3HT1 :0 ~Jr:C

...... ith respect !O :lny economctri.: In:liysls I: IS more jiffi::..::t :.J C"2.~::.t~

After c3refully considering the misspecifi::ltions :lsse:-:c': by "VEF-\ '·\C :liC

un2bie to find 3ny indiotion thJt the St:lff Report omitted :lny \:If!:1:':-ies

that would be expected to ce correlJted with R\fA l:l'...·s. Abse::t J

r C! :1 t ion ship wit h R \1 A l:l w S. the 0 m ISS Ion 0 f suCh va r i:3. bIesc Ie:l r i \. doe s not

:lfle..:t the V:J.lidity or the :l1l3Iysis. In :3.ddition. WEFA :lsserts thJl

re!:llionships among included '/:lflJbles C[ln Ic:ld to misleading or bi:lsed

results. We e.,<pl:lin bclow why this is untrue. Fin:lJly. WEFA mist:lKenly

cqu:ltes the total expl:ln3tory power of In econometric modcl with the

signifiC:lnce of :In individu:ll v3ri:lblc.

WEFA J.sscns (p. ·n thJ.t "Viewed from the perspeCtl\'e of its ::lbl::~:. 'v

c."(pJain rcglon3i vJriJrions In the ~e::ll~r ffi3rgln. [he FTC mod:! IS :1 f::ii'....~::.

The model introdu,:es lOS f:letors of which -;-Y:1 hJ.\'e:ln in·.:orrect (usin~ rTC

, ~J ••

\'C ry , ~'

St:ltlS~i': C.X.IStS to uct::rmlilC en tire

[J.ctors In J. mod:::l. r3Kcn togcr:--e •. HC st:lt;stic::111y mCJnir,g:·ul.° E.::.:h :·1

rhe 9 equJ.rions :n the SrJff Report p3sses this rest J.r ::10re rh::!n ..... i~

l" ....

sep:lrJ.rc rele\'1nr expl3nJ.rGry fJ..::ors indi\'ldu:lI!y. [wher:] rhe \Jr;GJ3

expl3n'atory factors He ir.tcrrc!J.tcc", This IS nor !rue,'

cxplan:ltory v3ri:loks do no: ':J.use :n.:orre.:r estirr.Jrion (ti::!s:.

the estim::nion yields sign;;-i:::;nt cJeffi.:ients they 1re perfe:rly ~ .. '-

6 This st::ltistic is '::lllcd :In F-st3tistic. The F-statisti.: is cased onhow much vari3tion in rhe v:J.riablc of interest is expl:lined by the f3.:torS inthe model.

-; In fa':t. if a model ~JS inrcrrel:lted explan3rory v:J.riablcs, theomission of any of these vari:lbics from the an::llysis will bias the results.To 3void misspc':ific3tion. it is essenti3] th3t 311 v:J.riables chat affect rhedependent vari3ble 3nd :lre interrel3tcd with ocher expl3n3cory vari3blcs tcincluded. See Pindyck, R .. 3nd Rubinfcld, D,. ECOllometrlc ,\fodc/s & ECOllonucForecasts • .\1cGraw-Hill, 1981 (PP. 1:8-130).

-:orrect. 8 Ani n tc rr :; I :ll ion s hip :l m 0 n g \ :H I:l b icsis :l n ~"( C' i J r. J t jon ,~, ~ : '. ! j r

why in d i v i d uJ l: c, c:" f ic ie :l (S m J y J P Pc::l r tot e :ns; gr. i t' j CJ n L

J.nJlysis. the res:.:i:s con:c,nlng the inci'Jded ;'Jctors Jre :;c, \':llic, T:-::5:5

11 0 t :ll W J \' S (r uc, T h t: ex -: Ius ion 0 f reI e '. J:l t \ J r: J cit: 5 b i J 5e5 : ~ ~ est i J:.:'. : C5 ,:;'

t h to: ; n L Iud c d j. J .::: ~. r S o:'1I~· : 1 ( h c i ;).:! udec :.:1': ~ 0 r S J ~ ;: ,:: =- ~ : ::J l ~ ,j '.\" i I ;; . L. ro

excluded :lnd incl"dcd fJctors,

reg jon::11 cos ts 0 f 'J w n I n g J nd 0 per:l tin g H\ Jut 0 m0 'c i i e d eJ Ie rs hip sn() ~ id L' c

included In the :'.:1:11'.5:5

. ~,

not differ in this WJ\, ther. the e5t:m:l:es octJined without .1.... ...~ . I ....

regior.:ll cost v3rlat:ies Jre unbiJscd.

WEFA su[Sgests thJt I', "I _

::>crformed ''''''eli il For eX3mple. \VEFA Sl3tcS (p. :l) "the 'Jbje:rivc (Ii,1-.. ...:'11 ...

8 See Kmen:J'. J,. E!emelllS of ECO/lometrics, \1:lcmiIlJn Publishing Co,~cw York, ~ew York. 1971. KrnentJ St3!eS (p, 338) "Let us now e:omlne theconnection between the degree of multicolline::1rity and the properties of theIcJst squJres estir.1ators of the regressIOn coefficients. Cndcr the basic3ssumptions of the clJssiC3! normol linear regression model. the l::Jst sqUJre~

estim:ltors of the rqression coefficients h3ve ::111 the desirable properties,"

9 By relevant, we me::1n thJt the vari3clc is importJr.t in exploiningthe dC::ller price or t"11::1rg:n,

10 See Pindyck, R,. 0 nd Rubin reid. D" pp 1:8-130.

11 R" indicates the perccntJgc of vari3tJon in the dependent v:lri3blccxploined by the model

;;-'

FTC supply model WJS to explJin regionJI \JrlJtion5 in the dC:llcr l1iJrgin

:lnd to determine \vhether in!roducing R\1.A I:lWS in'.:rc:lsed !hi:; mJrg:i'. II

esse n t i::li IY :l II the c:< p IJ n J to r y po w er inth C J \' C r :J. gC U:i; t rct:J. il ::' ric C C::.; L: 2 t1J n

R\1.-\ ;2',\5 is c:;r!:--~:~, ~u:~:~·"··",,"",·

e:<plJincj by the St:lff Repon model (R"l, .s not :l re:c\:J.nt cons::.:rJriO:i

The WEFA JnJlysis :-:ext rurns to more subS!Jnti3J m:J. ttus ~ ,-'J,

misspecific:J.tion The r:13)CH r:JissrcciCic:J.tiun citcd Lv WEFA '':2;] te 3n2!:.:e.:

III. Empirical In\estig:ltion of \\'EF~ Comments

The \\'EFA report c!J:rr:s thJt. r:uher th3n finding th3t R\:-\ 13\\5 res;.;';

;)opl:l:J.tion, the St:lff Re;:Jor: :ns r~:lily found th:lt either: I, m2rket Jre:!."

'.\' i t h I3 r ge :I bsol ute p (, p u f 3. t Ion 1ncr e:J. sCs h:l ve h igher ret:1 i j r:< 0 to r \' C n. 1.: ic

prices. or :) m3.rket JreJS with old R\1A laws :lnd !Jrge aesolute popu!Jticil

;n:re:J.5cs have higher reni! motOr vehicle prices. In pJr;iculJr \VEFA notes

(p. 4) thJt "since only l:J.rgc r3pidly growing cities h:lve ;:Hgc :lesolutc

popui:J.tion incre3ses. the FTC mJy merely have docume:1ted th:lt w:lge 3n":

lZ This conclusion :lsst;mes th:lt there :lre no omined [:lctors rh:lt ::Ifecorrelated with the I3.ws. There He m:1ny examples or empirical modelswhere there is a low R 2 :lnd very reliable cCfe:ts on :3 specIfic factor. Forexample. In examining C3rnlngs JCrOSS individu:lls, those who have moreexperience e:lrn more th:ln those with less experience. The typical R 2 insU c h mod e lsi s :l p pro x i m:1 tel y .: yet the [ J c tor "ex per icnee" iss t:l tis tic:l II \'signlfic:lnr.

6

urCJn JrC:lS Jnd rurJI JrCJS,

The StJ.Cf Report includcd the ;CrCL'!Zlr.-.;:! ;:~Jngc in populJtion (whether

the ,-;i;.\lli:i:_' .:hJr.gc In populJt;on j"r JreJS Wl;~ grc'.... j;:g populJ.tion S.'10Cli"::.

TJ ... - - - " .~1 _ .... '_ ; ,

t h tlt t his tim ~ \.,. e h ::l v e inc Iud e d :l \' 3 r i3 b let h J t C3 P: u r ;.: s \\.: h c the r ::l n 3 r C::l :. 3 S

positi\'e Jbsolute popul::ltion gro\\th 3nd, i( so. ho'.\' 13rge 3n J8solute ~r8·"th.

pcr~:nt:!g:: h:1'.::: J posi[i\'~ Ci~~-:~ on.,

;JII,:~:.l""

\\·c h:1\'e 31so rc-estirr:J.!~d the iGC;1tic:d s~;:~i!~i·:2.tion~ cx.:~~t th:}t ~h:s

time use th~ pcr.:cntJ.ge , I·J:l ;::>opu Jll::'"

otherwise.

growth :lnd R.\1A 13ws t·) ;'lr,.- 1"> C~ i ..... _-' gr .j \"- t h :::.J t

R .\1.-\ j J W s, The res u ! tsus J :l g t his Ii J. r :J tie.: 0n Cj r r:; ( he·.: 0 i'l .: jus ion : :-: J t J:l

growing 3fe::.s, R.\1A !:lws h:l\e J positive 3nd ,ignific::lnt erfc.:t on th~ price

of ::lutomotiics. H

The WEFA study suggests thilt it is more 3ppropri::lte to explJin CCJ!cr

m:Hgins rhtln to o:pl3in rerJii prices. \\'EFA clJims rn3r by including deJler

13 The ne\1.,-' 3nd origin31 regression results 3re presented in AppendixA, ::llong with 3 brieC summJry of the findings reg3rding the !::lw v::lri:lbles.

14 The regression results for the origin31 3nd new specific:nions 3reg i ve n i n .-\ p pen d i .'( B J Ion g w i rh ::l b r icf sum milr y 0 C fin din gs reg 3rdin g thelaw vari::lblcs.

.: 0 s t J. S 3 n ex p 13 n 3 tor y v3r i::l b Ie. t h c R: of rhceq u J. t ion is;' 1gher J. nG 0 f :- c r s

3 mislc3ding indic3tor of performJ.ncc of :hc mode!. While V,le do not J£ree

\·... ith WEFA's clJim 15 . In the interest of completeness we hJve rc-estim3red

The results confirm our conclusion rhJ.t in growing :lre3S R.\IA 13WS h3\'C :1

1\·. \\EFA Comments that Require Addilional OJta

V3ri3bks that He 3ssoci:Hed with the sDecific 17<HKet ::lreJ. (S.\lSA or countv

:~\'e!) thJ.n to use st::.tc'.\"ice :l\er::.gcs. For e:omple. \\·EF.~ suggests rh:n

who Ies J. Ie - ret 3 i I [r:l d e 3 n C se r \' icc -sec: 'J r \\I:l ge r:l tes. v.. hie!: c::. n :: c c::. J c ~ : :1 r·2 ::::;

for 311 the m3rket J.re:J.s. It is not cleJ.r whether these "·::lri::.l::lcs "'c·~:.: ~~C

T his w 0 u Id d e pen don h 0 \.... S j m i i H ::. u to· d C:J. Jc r W:1 g2 S :1 r c

wholes:l!e [r::lde w::lges versus no\V simi13r loc31 Juro ·:e::.ier '.1.:lges ::Ire :.::.

statewide auto de31er w3ges.

15 \\' e ha ve 31 re3d y dis m issedt her a leo f R: in e v 3.1 u 3. t j n g the j m p3 C t

of R~A laws on the price of motor vehicles. In 3ddition. the econometricmodel was origin::illy specified ::is :J. dem:lnd 3nd sup;:;!y eqU:ltlon forautomobiles. Consumers do not C3re 3bout m:lrglns, they ore 3bout prlcc.It is 3.ppropri:1te to estim:1te the model with price :lS the dependent v::lriatlcand include determin:lnts of price as explanatory V::lrI3bles. In fact .. byincluding the cost of t~e automobile to the dc::ller JS an exp!:ln3rOr\variablc, the Staff Repon is beIng less restrictivc since is not restrictingthe cocfficicnt on this facior to be equ:l! to 1. as is the case if de:1lcrmargIn is uscd as the depcnd:nt v3ri:lblc.

16 The results of these regressions are given in Appendix C along withJ. brief summ3ry of the fincJr1gs regJrding thc l:lw variJblcs

8

WEF.-\ also suggests that it would be uscful to obtJin OJ,J j~ ... ~

I l.,.' I

dc::tlerships over time and compare the prices 01' automobiles before the R\1.-\

IJws were passed to the pri-::es J(ter',>,,·ards. Tilc\ -::IJim that be-:::1use mJr.\· ct'

the poter.tial omitted \'ar::1cles ';,'ouiJ r.ot -::~::::>g::::J\::r ::me. ::-y -::Or.~;:Ji;r.;

PIOC- :1nd post-law prices we would :1\'oid m:::n:; pro::!ems. Whiie wc 3gre::

l :l ~. J. 2: 1n ! ~ C ~ i rn c -5C ~ ; ~ s. .: :- 0 SS- Sc ::! 1'J n :J ! :J r: ::. ; ~, S 1S

suggcs:::::d by \"'fFA. the numL:c; 01 -::ross se'::lon obscf\:1tions l·jiCCc,e:1t

deJlers) \,.. ill far exceed the r.umber 0[' time pcriods (the number .J( \'eJrs 01

r :; g i0 r. :1 i Ci f [' e , e nceSin d e:11 e, 0 '.\ ncr ship :1 n j 0 p e i :1 tIn g cos t r:1 uSt be;:" c ::: er : \

:lnd .:omplctely incorpor::ltcd intO the mo2cl. .-\ddition:111y, \\'fF-\ suggest:

th:H regional differen,:es in ,:c:1krship oi::e. 3:::::::S i7",:\ within i.13:-:CS. :::::1;C,

supplied aptions. ::Ind regIon:::; differences in ;c5;sIJtlon r.;USt be ir..:!u,':e::: -\::

dis c ussc d :l b0 v e . be C:1 us ,e 1,1, T F Apr 0 '.' ide s n 0 e '. Ide n c C t h:H the se \' ar i ::I t ! CS J r'

sy-;,tem:1tic:111y related to the existence of R\1.-\ J:1WS, it C:ln:1ot be -::onc:ud:::::

tllJt their omISSion from the St::lff Rcport model will ::If:"e:, the nlic:t·; of

the conclusions :lbout the effects of R\1.-\ IJws,

V. Conclusion

Al tho ugh WE F ,-\ h::l S C13 i me d t h:1 t Ih e S[J f r R C;JO rt m:1 y be sub jc CIt 0

spccificJlion error, WfFA provided no C."<Jmplcs of misspccificltion th:11 HC

likely to :lffecI the report's conclusion. WEFA cited :1 few vari:1bles thJt

9

:HC not included in the :In:llysis but WEF.-\ provides no c\idencc th:l£ ::-:CS;;

v:lri:lblcs differ system:l£iC:llly between regions th:lt :lre sub.lc,,:; to R\1.-\ :J''>'5

:lnd regIOns rh:lt :1rc not,:1 neceSS:lry condition for ot:t:lining bi:1sed rcs:.;lE.

WEF-\'s spccul:1rion th:1t the St::ll"l" ~:;;::on h:ls demonstr3red only :~J,

r:1 p i d I y g row i ng :1 re:1 S h3 ve h i g her :1 u tor:: 'J [) i1cpr ice s h :1 S bee n show n tor c

u r. fau r.ded.

on motOr '. eh lck prIces. Othe:- SPC~!I :'::J~lv:;S of th~ gro\\':h \'Ji::1l:ie :.sc

conjirm the effects of R\1.-\ 13\\s. Fir: :1 !; y. ~ X :l n1 i n :1 : i 0 :1 0 I .: : J ; e:- m ::l :- ~ 1;, ::

instc:1d 01 prices does not c!c::.nge the report"s conclusion.

10

Appendix ,.l,.

In this Jppendi-.; we report the originJi J:lC new estim:!tcs of the suppi\

::ll:s,.::i u;:::

JCfce, the coefficient on the growth v:lrJ:!cie, The results below re\e::ll th:::.t

....... ~

JbsoJute popui::ltion growth. I~GR J. is ;J05;tl\: ];..J SJgnJi IC::;-ot, In 1·::C:. t;-;:

.m::l gnit u de J n d the Ie \' eI 0: s: ~ n j f j CJ. nceo i' ,!i j,; c:: c ;' ric i : ;. tis I J r gCr (c r e \' c ~ :-

VJiucs gre:1tcr than or equJI lin Jbsolutc \3Iuc! ;0 1,96 Jre :lgniiic::l"t ::H the

95:'0 level. The t-\'3!UCS 3re reported under the coerficic:lts ::lnd 3~pCJr in

p::l re:1 theses,

1:' To be consistent with thetrtlnsformed the Jbsolute growth vJriJble.the lr::lnSCorm:Hion oC the AGR '.'JriJblc in

II

originJI specifie:Hlon we htlvcThe tnnsform::ltion is identicJI to

:he 5t:::.I'[ Report Ip, 6:),

The Estim3ted Regression Co~:·:-;.:ients for the Rct3il Sup;::>I:. Eq~3:;Jn

Cor the :"line Chc\y -\utO Body-Types (or 19"78'Depcndent \·3ri3i.:'ic = Log of RC:311 Pri::;

'" ..'-'-'

.68 i G

ROLD

lAGRO

1.-\ G R 1

-.1 G! '( - 1.(8)

oi 'J3i J~9'i

-.GO: -:­(-0.83 )

- 1:53(- :.10)

:::)1 :.1I ~ . ~ 9)

1 ~ f' ,..... 1 _1~O

), ~;O,

- 1.: .') J

-.09.111- i . '7 0)

I:,OQ ~

! .5 ~

- CC: S-0.90 )

-. I .:> j "

:. -91 (1

f .5,":-j)

(.661

: 'J - 1

-J: i 8

-.C·3,'

JAGR ISQ -.5.3~8

(- i .91 )

PW .91)'7-:-(69.S3 i

\\'-\GEO::1

.-\DV -,00~3

(- 3.61 )

D E:\S -.0039( -5.":6)

GR ·00311- .... 0 j

FORCE -0 I 351-:.53)

CA~CEL .OI7~

\:>.:>4)

LD -.0131(. :,.: i')

-9.5: ... .1

(-.5. I .1)

.9162i6'7:5)

0158f j -6)

·0055( -5.00)

-.00:8(-4.! 3)

. 1'755( -2.0:)

-.0162( -:.'70)

.0::6(381)

-.0 I 07(-1,90 )

9306

.C203

-.0035

-00::(- 3.38)

.0053('7::;)

-.0 I: 1! ':.39)

Oli:(3.52)

-0160(-3.14 )

I::

-:5-:--:-0( ·.1.:61

.938 I

0::;5C _'j

-.0054(-504 )

-.0015i ·:.:6)

-.; 99::;(·: ..11 )

-01-:-0: -:.901

02-11( 4.19)

-01.16(- :.6 5)

- oJ I ~

-001 ...( - 1. I .1 )

cOI.1( ! .95)

.i) ISO( :96)

-oe'-;"I1- ).11)

007-111.-18 )

-0 I 16f.::.:::)

_ ; l'" \

: ~ s::

'-'-) ;

- C03.5

.c:o: :(3C5 )

-.1 - J I

( -l9'7)

·0106(- ; . '7 -:- )

01..."(:.:9 )

- 00901-15.1 )

The Es,imated Regrcssion Cocfficients for the Rctail Supply EquatIonfor the :"ine Che"y Auto Bod\-Typcs for 19-8

(Dcpenden, \'ariacle = Log or" Rct:lil Pricc)

.69! ) .::. - -

ROLD

lAGRO

I.~GR i

.0 J 5510.30)

...oo:~" ~O)

1.59~6

i .106)

-0006(-: ;1

-.0:60{-0.51 )

.00: 10.: 5 j

:".155<;\,4.60)

.i;O::, . 8:)

·.0990{·i.79)

0100

;. -00­I,~ C:.';

-.CC::

-. J J S.1(-:.: 1)

01:0" ; .91 )

:.35(:1:{~ 5S}

- >=·.15. • I

.. '_: _ -"' i! ... 32j

.. G95 i

1.-\ G R 1SQ -5.0:' ~(-:.03 )

pw .9067!90.34)

WAGE .0151I. 1. 7:)

ADV -0021(-1.96)

DE:'-:S -0007{-1.l0)

GR .0108( J .5.1)

FORCE .003 J

(0.63 )

CA:"CEL .00361.76)

LD -00871-1S2)

(-.16; )

.91 J 2(8;.--)

.0::;;

-0035(-3.1 7)

-.0003(-0.56)

-.0768(-1.0: )

0013(0.2.1 )

.007 I(1.35)

-0076(- J .5.1)

·.16: ]

.01 -:11.961

-.0027(-2 ..1.1 )

-00: J

(-3.05)

0017

-.0 J 62(- 3.::)

.0179(3.68 )

-0121(-2.37)

13

-77015

.95~C)

-'::;.95 )

•'"\-" 1. __-_.i 'I

-003;(-363)

-.Ou I j

(-:.:5)

-0908(-1.13)

-0 I 72(- 3.1.1 )

.0:06(3.83 )

-0 I 03(- J .96)

: .. _~ I

. ":' - -,)

'.'''' I

'- "\ )

<015(-1.:'.1)

-iJC161-1.8.1)

.02 CJ I(:.:':)

-0062(.: .00)

.01:81:.09)

-0168(.:.7'7)

_ 5

- .---)

-.0003(-0 ..1 1)

-1.185,-1.6.1)

-00; 5(- i .17)

.0 J 83(2.88)

-0 I 18(·:0: )

Appendix A.

The EstimJred Regression Cocffi.:ienrs I'or rhe RctJil SL:::-;::-::- Equ::lrionr 0 r rh e ~ i n e C~ C\ Y .-\ u roB0 d y -T y pes for I 9- S

(Dependent \-JriJck=Log of RerJil Pri.:el

c 556J

Chcvcne

~336 .J i:3 . ..:;:. ; .... - .-..- -' _:."

R ~ E\\

ROLD

lAG RO

I..;GRI

-00:5',-8 I )

-.0672(-1.03)

.0053r 70)

i .9361(4.33)

-00:-:­t. -0. 7'71

-.J 03 '7(-1.61)

.003911.18)

3.:553(5.65 )

-.;0 -:-:1- 1.6 I )

-o:SO( -.:": )

.001 :, .:;9)

... -' -.:i 345)

-OC,SO(-I.5S)

-.0331(-0.-:9)

.0077(0.6:)

:.199:(3.59)

3033; 159)

-.• 1".­.. .,.:-'--

3.: 53-:­:.36 :

- - " -:.

10.5 - 1

. .­- L'-~ .

I· _ .. _ ,

- ..'_. __ I

lAGR1SQ -4.4453(-1.54)

PW ,9:89(95.60)

\V.-\ G E .0 I 93i 1.99)

AD\' -.0038( -:.99)

DE~S -0005( -.66)

GR -00::(-.: 7 i

FORCE -.0096(-1.71)

CA~CEL .0 [86(3.38)

-9.933~

(-5.21)

.9368~88.95)

0:63(:.8 I )

-.0057(-4.81)

.0008( 1.09)

-. J 941(- ~.I3)

-.012 J

(-1.93)

.0246(3.92)

( - 1.3 I )

.96.:9/8967';

-. ............1....1 _

-.0056(-:.76)

-.00 J S(-1.7:)

-.0060(--l6i

-01:0(- I .60)

.0:::(3.:5)

-'7.J6-:-51-3.69)

.9658(SS:.: )

.Q3361:.331

-.OOiO(-3.96)

-.0006(-0.61)

-.060:(-0.63)

-.009'7(-1.23)

.0:34(3.34 )

- !. - - :_1

I _ .... 1 J

.9- ..:~

J ~ ;. -:

000:(0.06)

-003-:(-3.8:)

-.i)i69(-':-01

-0031i -. i 9)

.0 1:-1(.79)

·15.~. ..:

"_' , _'" 1

(. 10 -:- ;

- CG-l6(-:.33)

(-:.: 1)

-.:JOJ I

(-0.:5)

.0: 17( 1.3:)

LD -.0212(-3.93 )

-.0174(-3.10)

-.0050( -.6'7)

I •. ~

-.0030(-I)JO) I I.:; 7)

.Q3J-l1:.1 S)

Appendi:-.: B

In: h i5 J ;) pen c i X \\ C r::;:: c:

T~c gro"'-th ~:ltc

......... r -.~~,..,.~

~ 'l ...... :; ... ,:lIe :0 " 'I-"'\ I.

(' C the ,) t ~ C r \' J r iJ t j C:3 ;) r c ': '2: I ~ ;:: :l S l r. :: ': '.\;2;- C' 1;: t h ~ c'r;::;-: ~! i C ;::-,~ r t. ! :

. ~ .:'~::. - - - .

:ll :he 95 co level. The t-vJlues Jre repor:ec unc:er

In ~Jrcnlhesc~.

15

Appendix B

The Estim::lted Regression Coefficients :"or the Ret:: Ii Suppl\ EqL:::Itt<J:lfor the ~inc Che\y Auto Bod:--T:,pcs :";:,r 19-3

(Dependent \"JriJb!e = Log ot' Rcnd Price)

"l~:: i,U

ROLD

lAGRO

LA G R 1

~ , ,I -, ':::" .... I

- j 013(-1.68)

.0; 03

:CS69

-OCQ(-98 ')

-.1091(- 1.8-1 )

.0 I.:\ 1.65',

[-1.691

(- i 1bl

-09-11(-1. 70)

.0095, ;50)

i ! -,t ..... J ;

(-I.: I;

-.1060(-1.93 )

.0 109

1.6939("':.1.J)

,~:'.;.' -

·J395'..66 )

r '"'\ ,'--.U'JO·

: - 9 -:-)

..., ........"-' - - -

_S "

.J 1~ 'J

" ,

... - ~ - :

~ '.'.8'-' I

IAGR lSQ -5.3~3

(- 1.9 I )-5.39(-1.93 )

·~.5),'J

(-1.:5)--1.6191-: 73)

-9; 69, .-, - - ~-

pw .90'7:(6983)

.90St69.:8l

.C; 1:1 ... - ,

{ J .~;'.J

.9306! 77.80)

0:':3

i _ ':

0°:6. C.:J -;_

-c; s

ADV -.00-13(-3.61 )

DE~S -1-,039(-5A6)

GR -.0031(-.-W)

FORCE -.0135(-:.53)

CA:--:CEL .017-1(3.3-1)

-.00-13(-3.66)

.0039( -5.": I )

-.00:-1(-.30 )

-.0133(-:.58)

.0 1;7(339)

-.0033(-3.-13 )

-00::(-3.38 )

.0053t. '73)

-01: I(-:.39)

.01-;:(3.5: )

-.0389(-3.5-1)

-00::(-3.3-1)

.0050(.66l

-0 I 25(-:'-~5)

.0177(3.59)

-.001-1(- 1. I -1;

001-1( 1.95)

.0 150(1.96)

-.0071( - I .-1 I )

.00: -1(J.-18)

<0 -, - I . - _ :

-00'75(- I. -19 \

.0080( J .60)

LD -.0131i - :.-1;)

-.013:(-:.-13 )

-0160(- 3. I -1 )

16

-0 J 61(- 3. I 5)

-.0116(-:.:: )

-.0 I 16(-:.: 3)

Ap;:-e:-:dn B

The Estim:1t::d Regression Cocffi'::Jents I"or the Re::lii Sv:;;::: E::;u::,ionfor the ~in:: C;,c"y Auto Body-Typcs for IS-S

(Dcpendc:1t \":1riJble=Log of Rct:lil P~iC::l

\10ntc C::r1o

.'\ I.~

ROLO

i:~GRO

-CC06\-:0)

.0 155(0.30)

C f"\~'.... v_~

(-JO)

(4.06;

-.COC:~

.0095( 19)

-0017. -: S)

i': r) 5)

-.0990(-J. 79)

,'J! 00! : .5 S)

-0G:3'-. SJ I

-1036(-191 )

',; 106

I 6°5:i 4(.0)

- ~ 5:: 5)

, " - i

_. i

00:--r>,

._ J J

.... r, ....... . ':'~:_'

f-\ G R j 5 Q - 5. 0 ~ ~

(-2.03)

P\:; .9067(903~)

.. AGE .OJ5!. I ."7 2)

.-\0 V -.00:1(-1.96 )

:) E:-<5 -.0007(-I. 10)

GR .0108( 1.54)

FORCE .0031(.63 )

CANCEL .0036(.76)

-5. J 4( -2.08;

.90: I1903:)

·176:,

-00::( -2.00)

-0007(-1.01)

01:1( 1.65)

,0031(.63 )

.0037!.7 8)

.9.:95'S 1.9:)

" - ......... ! -

-00: 1(-3.05)

.0017(.:3 )

-.0162(-).:: )

.0179(3.68 )

-4.66": I!. -I. -; 4 i

-.00: -:(-:.48 )

-00:0(-3.00)

OO:i(.: 7)

-.0163(-3.:3 )

0180(3.70)

... c. -,,_

. '" _ i

... ~ I; 15! -i.J..t)

-':),J: 6i -!S~)

.0:0 Ir:.::)

-006:r-1(0)

.01:8(:09)

-,0016(- j .1 : :

-0015(-1-:--)

.0193(:.05)

-.006:( -.99)

.0 I 28(:.10)

LO -.0087(- 1.8:)

-.0088(-183)

-0 I ::: I(-:.37)

-.01::(-:.37)

-,J 16S(-:. -;7)

-.0168(-2.73 )

•:-\;:>pC:1dix B

The ESllmJtcC Regression C::,cfCicienls (or the RctJiI Supply Ec;:..::::ionl'ur thc :"iinc Chevy Auto Bod\'-T\~es for 19-5

/ Dependent VJr:Jble=Log or RCIJI! PriC:::::l

,-

C' ~l C \" C ~ t c SpOrt·.J:J

.::..:5 .., I'

R:---: E\\'i -S I)

C}O:6I -S:)

-,0077i - 1.6 I ) ! .:0.'

,-I.

1.- i

ROLD

lAGRO

IAGR iSQ

PW

WAGE

AD'v'

DE:---:S

GR

FORCE

-067:(-10.3 )

COS:;.i ,-:0)

i ,9S6!

i - J.5J)

·9560\

JI9S, 1. 99)

-00.38( -2.99)

-.00051-,66i

-00::I ..... '"':",,-.- .)

-.0096! -1.7 1)

-as J 3(-1.:6)

.C069'.93,

1.9853(..L.31J

-..U90.3(-1.55)

.9292195. J6)

.0:0 "7

(:.08)

-.OOJO,- 3. J 6)

-0006(-"i 3)

-,0053(-.62 )

-.0 I0:;(-1.30 )

-.0:80t. -.:J)

.001:, ~9)

1.73:313,J5 J

-369-:( .. 1. 3 I i

.96j9(89.6-:1

o~-~

( 1391

-.0056(-2.76)

-,001S­(- I."i:)

-0060(-.J6 )

-.01:0(-1.601

.. 03531-,3! )

-3.7050(- 1.3 J j

965:i S9'.'di

, (-'

I. ! .... _... ,

-0057(-:.83)

-.0019( .. 1. '73)

-00'71(-.53)

-01::(-162 )

\ 1.69)

-o..:c:1_ i .95'

.. ; 5 S­,:,36,

( - 1 '-._ I •

. - r --I': "'!. _

.; 5:

oeo:(.06)

-003 -;(- 3.3:)

-0169(- -; 0)

-0031(- 19)

(I, _)

:. :: - J

l01, . _ i

-.oess(- 38:;

0 ......... '-)-

1- 93)

-.0035(-.:: )

CA:-':CELO 1360.38)

.0:::(3.:5 )

O::j(3.:8 )

.0 l:j(,79)

01:6(.80)

LD -.02121-3.93)

-021:(- 3,9:)

-.0050(-6'7 )

18

-.0050(-68 )

.0:::( 1.3 7 )

.0::::

·-\ Ppen d i x C

In tnls 3prendix we rc;:-ort the estJ!7:3reS of the .jeJ.lcr ;;urgin equJ.:ior..

c· rig in J.l ;:-:) w (h \. J. r I J. :-1 e I 'x 3 S I..! 5edin ( he J n J : '.:: ; ::.

ex p l3. n J. (0 r y \' H j ::l b lc S ::l red:: :- i ned ::l S (h ey we reI n ,h C oJ rIg: n J i r :: ~ 0 r l. The

~ .. "'-

"" ': .::: ,:.. ~ '\. 1 •

of the 9 r;; 0 eel (y pes (he i n (e r::l C( jon or (he ; ::l W J n cpr:.;. c; , :: ( 1(., ,,2 ~ ::''' : i~

3ppeJr in ;J3renthcses.

19

.-\ ppend ix C

Th:;: ESlim3tcd Regrcssion CoclficienlS (or the Rct:lil Supply EqUJtlOnlor the :--Jinc C:'cvy Auto BOdy-Types Cor 19-:-8

(Depcndent VJri3bie=Dc3l:::- \1:Hgin!

VJ ri:l ',' Ie\ 10n Iee:lrl,) \hiii:'u

C

ROLD

lAGRO

IAGR.l

-.1795(-3.01 )

.0195(: 85)

I - - -J. ,_

-.00:5( -038

- I ' 1 I\ -::.40)

.0139I, :.:: 1}

13.5'7

- ! 7 ! ~

1-3.05 )

:J183,:s·n

,":993

;;0::3'090 ,

.0 I))

-0037! -0.5": I

(·'J.O~ .

. j .:5,

<9:; 5(- j S5;

.0 I 06i -:- S)

I _ . .) I J

IAGR1SQ -5."76';8(-1.98)

\VAGE .OJ9:(::.0-1 )

.-\DV -.00-4:(-3.~:')

DE:"S -/;033\--4.-47)

GR -.004!( -0-19)

FORCE -.01 if

(-3.:2)

CANCELO:Oi( 3.87)

LD -0197(-365)

J Q' ~...... -_.I(-IS::)

( :'.:3 1)

-.00::-:­(- :."::: I

-.0016(- ::.3 4'J

.0013(0.171

-.0188(- 3."7 I )

.0188(3.8: )

-0161(-3.!5)

-J -:: 86J(-1-::'3 )

~:81

(3.1 I)

1_ 3.551

- CQ:0(- ::.8 8)

-0186(- 35"7)

.0230(4.53 )

-.0:38(-4.64 )

-';.65 :0(- 359)

-.,J08 -;t-O.96)

-X1S(-155 I

.% i":(:.O~ )

.0098

-0081(-1.61 )

.0090( 1.8:)

-.0 I::(-: . .19 )

-... S~--(-1.85)

.C3 I -i ),59 j

- " .. ,.._.'-- '....; -' -'

hj] Sj

0114! ;..: 8)

-0064! - I:: 8)

'J 1! 8(: . .104 )

-o! 84(-.3 -;- 8)

Appendix C

The Esrim:ltcd Regression Coefficie~ls ior the RetJil Sup;:-i:, Equ::ltionfor thc :--iine Che\'y-\ulO BOdy-Types tor 19-5

(Dependenl V:Hiacle=De:l!er .\!:lrg:~,

C

K \: E \\

ROLD

IA.GRO

:.-\G?,

'Ii ........-.'~.-1 __

·.:·oso, - :.1 S )

(- I .95)

.0 I 49~i 1.761

1 .... ~1• 1_ ..... I

·OC6:(-; 'J 5)

·1596(-:.-44)

J16:(:. h)

- : -I ... j

I- 1. SO)

-.10°61.-:.0:)

0109\e.s-:,)

:~::

, .. -. )

l.-\GR: SQ .79-:'3i O.:~)

\\',-\GE .GO=:-:-t2.05)

: - J .8 I )

DE\:S -0014(-1.50)

GR .0181( 1.83)

FORCE -.0 1:.15(-:.2-1 )

C.-\:--';CEL .0:06(3.31 )

LD -.023 i(-3.80)

-j: 036(- 136)

.0360(3.61 'j

(-4:5)

-.000-1(-0.5-1)

-.00551-063)

-o! 45(-:.50)

.02·n(oJ.33 )

-0:44(-j 35)

-3.95 j ,

I-I.·WI

.03: J

(:.05 )

-006 '71-3-11)

-00 I j

(-1.:3)

-0080(-0 60)

-.0146(-1.98)

.0243(3.6 J )

-a 103(-1.45)

. _ ••. ::..: j

. - ,• '..... . _- J

.' I" ,

-r:::: 3, .~ ;:)

":<):9; '::.! 8)

.~. 19; O. -6)

i 139)