Policy reform in a market with differentiated products: applications to the car market.

The central issue in this dissertation is to understand the effects of policies in the European car market and to improve them. We take a closer look at three different aspects of policy decisions.In the first essay we propose an econometric method to define the relevant markets that is easier in use and interpretation than the currently used methods. With this method we find for most cars a relevant market that is smaller than with the standard industry classifications, except for the Italian domestic cars and the minivans. Based on these results weare able to identify the firms that violate the market share thresholdsstipulated in the block exemption regulation.In the second essay we focus on competition improving policies for the car market put forward by the European Commission. We quantify the effects of a policy that removes the vertical restraints in order to improve the degree of competition in the market. We find that a policy that reduces the international price differentials has on average only a modest positive effect on the welfare but rearranges its distribution across countries. The effects of a policy that reduces the double marginalization are higher.The third paper tackles some of the environmental issues in the car market. The effects of imposing a restriction on polluting emissions of newcars is evaluated and compared with the efficiency of other possible policies. We find that the policy chosen by the European Commission outperforms several other policies in terms of welfare costs.p001 1. Introduction p002 1.1. Structural models p011 1.2. The relevant market and its use in competition policy p016 1.3. Overview of the three essays p019 2. Market definition with differentiated products - lessons from the car market p020 2.1. Introduction p022 2.2. Vertical restraints, safe harbours and market share thresholds p024 2.3. Methodology for market definition p034 2.4. Results on market definition p042 2.5. Policy implications p045 2.6. Conclusions p046 2.7. Tables p053 3. Liberalizing a distribution system: the European car market p054 3.1. Introduction p058 3.2. The distribution system and reform proposals p059 3.3. The model p072 3.4. Data and estimation p081 3.5. The effects of liberalization p087 3.6. Conclusions and extenstions p088 3.7. Appendix p095 3.8. Tables p101 4. Introducing an emission reducing policy in the European car market p102 4.1. Introduction p103 4.2. The model p118 4.3. Data and estimation p122 4.4. Effects of environmental policies p129 4.5. Conclusions and future research p138 4.6. Tables and figures p147 5. Doctoral dissertations from the faculty of economics and applied economicsstatus: publishe