Trucks without Bailouts: Equilibrium Product Characteristics for Commercial Vehicles†

Trucks without Bailouts: Equilibrium Product Characteristics for Commercial Vehicles† AbstractThe entry and exit of products, rather than firms, serve as the main equilibrating force in many markets, so accurately predicting changes from a merger or bankruptcy should incorporate this behavior. This paper estimates a structural model of the US commercial vehicle market and demonstrates the importance of allowing for endogenous product offerings in the context of the $85 billion automotive industry bailout in 2009. Under alternate policies that facilitate an acquisition or liquidation of GM and Chrysler, product entry and exit moderate markup increases and output decreases by up to three-quarters. (JEL D22, G33, G34, H81, L13, L62) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

Trucks without Bailouts: Equilibrium Product Characteristics for Commercial Vehicles†

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Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
0002-8282
D.O.I.
10.1257/aer.20160863
Publisher site
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Abstract

AbstractThe entry and exit of products, rather than firms, serve as the main equilibrating force in many markets, so accurately predicting changes from a merger or bankruptcy should incorporate this behavior. This paper estimates a structural model of the US commercial vehicle market and demonstrates the importance of allowing for endogenous product offerings in the context of the $85 billion automotive industry bailout in 2009. Under alternate policies that facilitate an acquisition or liquidation of GM and Chrysler, product entry and exit moderate markup increases and output decreases by up to three-quarters. (JEL D22, G33, G34, H81, L13, L62)

Journal

American Economic ReviewAmerican Economic Association

Published: Jun 1, 2018

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