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Peer-Reviewed Study: Dealership Competition Lowers Consumer Prices on New Cars

Updated: Jan 14



In the automotive industry, it’s widely known that price competition among dealerships results in lower prices for consumers on new cars and trucks. When dealerships compete in proximity to one another, customers can shop around for deals.


That dynamic has now been demonstrated through data by economists T. Randolph Beard, George Ford and Lawrence J. Spiwak, who studied thousands of new-car transactions in Texas.


In a peer-reviewed study published in the journal Applied Economics, the economists:


“examine[d] how the closeness of a dealer selling the same make and model of vehicle affected the final price...”


and found:


“very strong evidence that the proximity of a same-brand dealer reduces prices significantly.”

According to the study, consumers saved an average of about $460 on the price of a new car when dealerships compete in proximity to one another.


Bottom line, dealership competition lowering consumer prices is now shown through data.


The study is available here.



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