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This paper develops and estimates a model of the U.S. automobile industry. On the demand side, a discrete choice model is adopted, which is estimated using micro data from the Consumer Expenditure Survey. The estimation results are used in conjunction with population weights to derive aggregate demand. On the supply side, the automobile industry is modeled as an oligopoly with product differentiation. Equilibrium is characterized by the first-order conditions of the profit-maximizing firms. The estimation results are used in counterfactual simulations to investigate two trade policy issues: the effects of the voluntary export restraint, and exchange rate pass-through. Copyright 1995 by The Econometric Society.
Pinelopi Goldberg (Sat,) studied this question.