The automobile industry exerts substantial impact on the level of economic activity in the United States. In fact, the importance of automobile production to the American economy needs little emphasis-almost 200 million cars have been purchased since World War II and one business in six is automotive in nature.' While significant research has been done on the total demand for automobiles, little study has been made of the demand for automobiles of different sizes. Also, the literature is void of any analysis on (1) how increasing prices, the recessionary economy, and the energy crisis (higher gasoline prices and/or possible shortages) are affecting sales of different size automobiles and (2) the relative importance of these factors in the present automobile market.2 Possibly the most elaborate study ever made of automobile demand was by Roos and Szeliski (1939). Their guiding premise, that consumers do not buy new cars but transportation service that is continually changing, was used in many later studies. Two such researchers were Chow (1960) The American's love affair with his car has led to almost 200 million automobiles being purchased since World War II. While significant research has been done on automobiles in general, little study has been made of the demand for automobiles of different sizes. The purpose of this study is to develop a multiequation model that can explain this demand. This is done by breaking the automobile market into segmentssubcompact, compact, intermediate, full-size, and luxury automobiles. The model fitted is linear using per capita data. The concept of seemingly unrelated regression is used to estimate the fiveequation model.
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Rodney L. Carlson (1978) studied this question.