Dealer Price Discrimination in New Car Purchases: Evidence from the Consumer Expenditure Survey

Pinelopi Goldberg

Journal of Political Economy, 1996, vol. 104, issue 3, 622-54

Abstract: This paper documents the variation in dealer discounts for new cars using transactions price data from the Consumer Expenditure Survey. Consumer-specific characteristics fail to explain dealer discounts, whereas model, market-specific, and purchase transaction variables (e.g., first-time purchase, trade-in, and financing through dealer) do explain them. The results contradict earlier findings of race and gender discrimination based on a controlled experiment. This contradiction is reconciled by examining the higher moments of the empirical discount distribution; while mean and median markups do not vary by race and gender, minority purchases are characterized by higher dispersion. Copyright 1996 by University of Chicago Press.

Date: 1996
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