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Car Dealership Markups

Svärd, Philip LU (2022) NEKH01 20221
Department of Economics
Abstract
The scope of this analysis is to evaluate what may affect the percentage markup on new and
used cars sold by dealerships across the United States. The essay will also take into account
shocks to market demand and supply as relevant factors that may affect markup. Vertical
pricing theory is applied to study what kind of relationship exists between the upstream firm
(manufacturer) and the downstream firm (dealership) when it comes to pricing and markups.
To study what factors might have an effect on markup an ordinary least squares regression
has been used. Some important conclusions can be drawn from this. Car type seems to have a
significant effect on markup. The manufacturer is also a relevant factor in the size of the
markup.... (More)
The scope of this analysis is to evaluate what may affect the percentage markup on new and
used cars sold by dealerships across the United States. The essay will also take into account
shocks to market demand and supply as relevant factors that may affect markup. Vertical
pricing theory is applied to study what kind of relationship exists between the upstream firm
(manufacturer) and the downstream firm (dealership) when it comes to pricing and markups.
To study what factors might have an effect on markup an ordinary least squares regression
has been used. Some important conclusions can be drawn from this. Car type seems to have a
significant effect on markup. The manufacturer is also a relevant factor in the size of the
markup. Arbitrage opportunities are also indicated by having a smaller markup if the car is
new. (Less)
Please use this url to cite or link to this publication:
author
Svärd, Philip LU
supervisor
organization
course
NEKH01 20221
year
type
M2 - Bachelor Degree
subject
keywords
Markups, Arbitrage, Dealership
language
English
id
9082045
date added to LUP
2022-10-10 08:51:22
date last changed
2022-10-10 08:51:22
@misc{9082045,
  abstract     = {{The scope of this analysis is to evaluate what may affect the percentage markup on new and
used cars sold by dealerships across the United States. The essay will also take into account
shocks to market demand and supply as relevant factors that may affect markup. Vertical
pricing theory is applied to study what kind of relationship exists between the upstream firm
(manufacturer) and the downstream firm (dealership) when it comes to pricing and markups.
To study what factors might have an effect on markup an ordinary least squares regression
has been used. Some important conclusions can be drawn from this. Car type seems to have a
significant effect on markup. The manufacturer is also a relevant factor in the size of the
markup. Arbitrage opportunities are also indicated by having a smaller markup if the car is
new.}},
  author       = {{Svärd, Philip}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Car Dealership Markups}},
  year         = {{2022}},
}