Price discrimination in the EC car market

This paper is concerned with a certain number of aspects concerning price differences for automobiles within the EC. The paper develops a simple methodology to check for price differences of heterogeneous commodities. It shows that it is not sufficient to compare aggregate prices of commodity classes, or even of single commodities, without making sure that qualities are identical. The paper applies this methodology to the car industry and shows that price differences persist over time, in spite of the ‘efforts’ made by the Commission to reduce or eliminate them. It also shows that producers use product lines to price-discriminate. A section is devoted to welfare aspects of price discrimination.