2017

Bailing on the Car That Was Not Bailed Out: Bounding Consumer Reactions to Financial Distress

Reprint No. 2017:32

Author(s): Christian Huse and Nikita KoptyugYear: 2017 Title: Journal of Economics & Management Strategy Volume (No.): 26 (2) Pages: 337–374
Online article (restrictions may apply)
Preliminary version


We examine how consumers react to the financial distress of durable goods manufacturers by studying the Swedish new car market. We employ a difference-in-differences matching methodology whereby we compare sales of carmaker Saab with those of a control group of substitute products. To account for possible substitution between products in the treatment and control groups, we propose and apply bounds to our difference-in-differences matching estimator. We then refine the bounds and provide conditions under which they depend only on product elasticities. We find that there was a significant decrease in the sales of Saab following its filing for administration.


Reference:
Huse, Christian and Nikita Koptyug (2017), "Bailing on the Car That Was Not Bailed Out: Bounding Consumer Reactions to Financial Distress". Journal of Economics & Management Strategy 26(2), 337–374.

Nikita Koptyug

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nikita.koptyug@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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