Abstract
This paper analyzes the phenomenon of pricing to market in the Swedish auto market. First, it estimates, with the help of hedonic regression, the pricing and product policies of the major car producers. Second, the impact of the exchange rate variations, quality effects and cost differences on pricing behavior are examined by developing and evaluating econometric models for a sample of the major car exporting countries. The results suggest that exchange rate changes, quality dimension, and cost changes play a significant role in explaining actual car prices in the Swedish market.
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