A Criminogenic Market Structure: the Automobile Industry

Sociologists have come under attack for ignoring the role powerful elites play in controlling society's central master institutions by establishing policies which set structural conditions that cause other (lower level) people to commit crimes. This study suggests how one elite, automobile manufacturers, creates a “criminogenic market structure” by imposing on their new car dealers a pricing policy which requires high volume and low per unit profit While this strategy gives the manufacturer increased total net aggregate profit (by achieving economies of scale and by minimizing direct competition among oligopolist “rivals”), it places the new car dealer in a financial squeeze by forcing him to constantly free-up and continuously re-cycle capital into fixed margin new car inventory. This squeeze sets in motion a downward spiral of illegal activities which (1) inclines the new car dealer to engage in compensatory profit taking through fraudulent service operations, (2) under certain conditions, generates a “kickback” system which enables used car managers of new car dealerships to exact graft from independent used car wholesalers, and (3) forces the independent used car wholesaler into illegal “short-sales” in order to generate unrecorded cash for kickback payments.