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Automobile Pricing

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journal contribution
posted on 01.05.2012, 00:00 authored by Allan MeltzerAllan Meltzer

At issue in these hearings is the request of five producers of automobiles and trucks to increase the prices of 1973 models to recover costs arising from changes in safety and emission equipment. Even if I were an expert on the accounting procedures used by automobile producers or the details of their pricing, I would prefer to discuss a somewhat broader question: Is there some way of separating the private and social benefits of the decision? Even if the man in the street, or the members of some vocal group, or the members of this body believe that automobile producers should charge less and earn less, it is useful to ask whether society is better served by a decision to grant or to refuse the pending requests.


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