This dissertation studies the effect of heterogeneity in consumer incomes on outcomes in vertically differentiated markets. When products are differentiated in quality, the consumer's choice of a particular product is a function of her income. Thus, the distribution of incomes plays an important role in shaping the demand for individual products in vertically differentiated markets. The first two chapters of the dissertation study the demand for passenger cars and trucks in the US. These vehicles are differentiated by quality that depends on vehicle's age. The first chapter studies the relationship between the distribution of consumer incomes and the distribution of vehicle vintages using a dynamic, heterogeneous agents model. The model predicts that higher per capita incomes are associated with younger vehicle stocks, if the vehicle ownership rates are high. If the per capita incomes are low, and so are the endogenous vehicle ownership rates, increases in income may lead to the aging of vehicles, by encouraging entry of lower income consumers into vehicle ownership via purchases of older vehicles. Higher levels of income inequality are associated with older vehicle stocks. The second chapter of the dissertation asks whether some of the observed increases in the average age of vehicles in the US can be attributed to the rise in real consumer incomes and the resulting changes in the composition of demand for different vehicle vintages. The dynamic, non-stationary, heterogeneous agents model, estimated on the aggregate vehicle ownership data for the US over the 1967-2001 period, provides a positive answer to this question. The third chapter of the dissertation studies the effect of inequality in consumer incomes on firms' entry, location, and pricing decisions in a static oligopoly model of vertically differentiated products. This paper computes the Nash equilibrium of a three-stage game similar to Shaked and Sutton (1982), to find that greater inequality in consumer incomes leads to the entry of more firms and results in more intense quality competition among the entrants. The consumption inequality is lower and the aggregate consumer welfare is higher in economies with greater income inequality. / text

This thesis investigates the operation of a system of second hand car dealer licensing introduced to Scotland in 1982. The aim is to assess whether or not this policy is having a beneficial impact upon the experiences of second hand car purchasers in Scotland. The second hand car trade exhibits a number of characteristics of market failure with respect to consumer's interests. The complexity of the product and the infrequency of purchase make information about both product and dealer particularly difficult to obtain and evaluate. One regulatory response to consumer problems in this market is to licence second hand car dealers. This approach has been adopted in a number of other countries notably, Canada, Australia and some states of the US. The policy has provoked a great deal of debate about the achievement of consumer benefits associated with information and standards as opposed to producer benefits associated with restrictions to entry and mobility. In the Scottish case the power to licence second hand car dealers was delegated to Scottish district councils who were able to take advantage of considerable discretion in designing, implementing and operating their own licensing system. When seen from a national perspective, this delegation has led to a number of undesirable consequences. This thesis presents two major findings. The first is that district councils in Scotland have largely neglected their licensing systems. As a result the licensing of second hand car dealers in Scotland is only partially operative. The second is that second hand car dealer licensing in Scotland is having no impact upon the purchase experiences of consumers. There are two implications of these findings. First, without a fully operational system no evaluation of licensing as a policy is possible. Secondly, far from being unaffected by this partially operating system, consumers are worse off than without licensing. This raises issues for consumers, district councils and policy makers.

by Chan Kwong-Tak. / Thesis (M.B.A.)--Chinese University of Hong Kong, 1999. / Includes bibliographical references (leaves 80-81). / ABSTRACT --- p.i / TABLE OF CONTENTS --- p.iii / LIST OF ILLUSTRATIONS --- p.v / LIST OF TABLES --- p.vi / Chapter / Chapter I. --- INTRODUCTION --- p.1 / Chapter II. --- MARKETING CHANNELS: STRUCTURE AND FUNCTIONS --- p.4 / The Basic Framework of Marketing Channels --- p.4 / The Functions of Intermediaries --- p.6 / Variation in the Basic Framework --- p.8 / Determinants of the Marketing Channel Structure --- p.11 / Chapter III. --- THE CAR LOAN MARKET IN HONG KONG --- p.14 / Marketing of Services --- p.14 / Indirect Lending Through the Car Dealers --- p.16 / Background For the Predominance of Indirect Lending --- p.19 / Cooperation and Conflict between the Car Dealers and Financiers --- p.21 / Major Car Dealers and Financiers in Indirect Lending --- p.23 / Rebate Commission --- p.26 / Functions of the Car Dealers --- p.27 / Growth of Direct Lending --- p.29 / Reasons For the Rise of Direct Lending --- p.30 / The Customers --- p.31 / Chapter IV. --- THE BANK --- p.32 / Background --- p.32 / Customer Profile --- p.33 / SWOT Analysis --- p.34 / Strengths --- p.34 / Weaknesses --- p.36 / Opportunities --- p.37 / Threats --- p.37 / Chapter V. --- CHANNEL STRATEGY --- p.40 / Analytical Framework --- p.40 / Corporate Objectives --- p.40 / Marketing Objectives --- p.41 / Competitive Strategies --- p.41 / Channel Objectives --- p.42 / SWOT Analysis --- p.43 / Direct Lending or Indirect Lending --- p.43 / Corporate Mission --- p.44 / Marketing Strategies --- p.46 / Competitive Strategies --- p.47 / Cost Leadership --- p.47 / Focus Strategy - Segmentation Decision --- p.47 / Differentiation Strategy- Service Excellence --- p.49 / Channel Objectives --- p.50 / Marketing Coverage and Distribution Intensity --- p.50 / Channel Control --- p.51 / Flexibility --- p.51 / SWOT Analysis --- p.52 / Strengths --- p.52 / Weaknesses --- p.52 / Opportunities --- p.53 / Threats --- p.53 / Dual Channel Structure --- p.54 / Integrated Marketing Activities --- p.56 / Chapter VI. --- CONCLUSION --- p.58 / APPENDIX --- p.61 / BIBLIOGRAPHY --- p.80