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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Ph: +46 8 665 45 82
nikita.koptyug@ifn.se

Interdisciplinary European Studies

The European Union and the Return of the Nation State

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This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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