Speaker: Meghan Busse, Associate Professor of Management and Strategy, Kellogg School of Management, Northwestern University. Professor Busse will present a paper that investigates how gasoline prices affect equilibrium prices and market shares for cars of different fuel efficiencies in both the new and used car markets.
As discussed in the paper, she and her co-authors find that, in general, when gasoline prices increase, prices fall and market shares decrease for fuel-inefficient cars, and the reverse for fuel-efficient cars. However, the relative magnitudes of these effects differ dramatically between the new and used car markets: in the new car market, the adjustment is primarily in market shares, while in the used car market, the adjustment is primarily in prices. She will explore reasons for these differences between the markets. Prof. Busse's research focuses on market structure and competition, with particular interest in pricing and price discrimination. Her areas of current research interest are energy economics and the U.S. automobile industry. These two interests are combined in work she is doing with two co-authors investigating how gasoline prices affect people’s choices about what car to buy. (Prof. Busse's website)