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Trucks without Bailouts: Equilibrium Product Characteristics for Commercial Vehicles

Thomas G. Wollmann

American Economic Review, 2018, vol. 108, issue 6, 1364-1406

Abstract: The 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-codes: D22 G33 G34 H81 L13 L62 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20160863
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Handle: RePEc:aea:aecrev:v:108:y:2018:i:6:p:1364-1406