The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis
Price dispersion is an important indicator of pricing strategy and market efficiency. However, the relationship between price dispersion and sales has not been explored, especially for durable goods such as automobiles. In this study, we use a unique data set from Autohome comprising the actual tran...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
SAGE Publishing
2022-08-01
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| Series: | SAGE Open |
| Online Access: | https://doi.org/10.1177/21582440221120647 |
| _version_ | 1818002287364145152 |
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| author | Ya-Ling Chiu Jiangze Du Jying-Nan Wang |
| author_facet | Ya-Ling Chiu Jiangze Du Jying-Nan Wang |
| author_sort | Ya-Ling Chiu |
| collection | DOAJ |
| description | Price dispersion is an important indicator of pricing strategy and market efficiency. However, the relationship between price dispersion and sales has not been explored, especially for durable goods such as automobiles. In this study, we use a unique data set from Autohome comprising the actual transaction prices of buyers to assess the extent of price dispersion in the new automobile market. Based on an empirical analysis of over 222,592 price observations for 59 vehicle models collected over a period of 48 months, we find that the percentage difference ( PD ) and coefficient of variation ( CV ) of new automobile transaction prices are 43.4% and 9.9%, respectively. In addition, the empirical results show that the price dispersions lower for non-sedan type, Chinese car brands, and produced by state-owned companies. We further investigate whether the increase in the price dispersion of a new automobile has a positive impact on automobile sales using a multiple quadratic regression model. The findings show that price dispersion has positively impact of sales. More interestingly, negative quadratic effects are observed, indicating a concave-down-increasing relationship between price dispersion and sales. This implies that an extreme price dispersion is less helpful than a moderate price dispersion. These findings advance knowledge of consumer buying behavior and seller pricing strategies, with important theoretical contributions and practical implications for automobile companies. |
| first_indexed | 2024-04-14T03:43:47Z |
| format | Article |
| id | doaj.art-f8b4a800183744c2976fe9ff4ca02507 |
| institution | Directory Open Access Journal |
| issn | 2158-2440 |
| language | English |
| last_indexed | 2024-04-14T03:43:47Z |
| publishDate | 2022-08-01 |
| publisher | SAGE Publishing |
| record_format | Article |
| series | SAGE Open |
| spelling | doaj.art-f8b4a800183744c2976fe9ff4ca025072022-12-22T02:14:24ZengSAGE PublishingSAGE Open2158-24402022-08-011210.1177/21582440221120647The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel AnalysisYa-Ling Chiu0Jiangze Du1Jying-Nan Wang2School of International Business, Zhejiang Yuexiu University, Shaoxing, ChinaSchool of Finance, Jiangxi University of Finance and Economics, Nanchang, ChinaSchool of International Business, Zhejiang Yuexiu University, Shaoxing, ChinaPrice dispersion is an important indicator of pricing strategy and market efficiency. However, the relationship between price dispersion and sales has not been explored, especially for durable goods such as automobiles. In this study, we use a unique data set from Autohome comprising the actual transaction prices of buyers to assess the extent of price dispersion in the new automobile market. Based on an empirical analysis of over 222,592 price observations for 59 vehicle models collected over a period of 48 months, we find that the percentage difference ( PD ) and coefficient of variation ( CV ) of new automobile transaction prices are 43.4% and 9.9%, respectively. In addition, the empirical results show that the price dispersions lower for non-sedan type, Chinese car brands, and produced by state-owned companies. We further investigate whether the increase in the price dispersion of a new automobile has a positive impact on automobile sales using a multiple quadratic regression model. The findings show that price dispersion has positively impact of sales. More interestingly, negative quadratic effects are observed, indicating a concave-down-increasing relationship between price dispersion and sales. This implies that an extreme price dispersion is less helpful than a moderate price dispersion. These findings advance knowledge of consumer buying behavior and seller pricing strategies, with important theoretical contributions and practical implications for automobile companies.https://doi.org/10.1177/21582440221120647 |
| spellingShingle | Ya-Ling Chiu Jiangze Du Jying-Nan Wang The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis SAGE Open |
| title | The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis |
| title_full | The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis |
| title_fullStr | The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis |
| title_full_unstemmed | The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis |
| title_short | The Effects of Price Dispersion on Sales in the Automobile Industry: A Dynamic Panel Analysis |
| title_sort | effects of price dispersion on sales in the automobile industry a dynamic panel analysis |
| url | https://doi.org/10.1177/21582440221120647 |
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