Focus Areas:    Automotive | Innovation

Open Letter of Scholars of Law, Business, Economics and Public Policy to New Jersey Governor Chris Christie on the Direct Automobile Distribution Ban

Open Letter of Scholars of Law, Business, Economics and Public Policy to Governor Chris Christie (Mar. 26, 2014).

Summary

“We, the signatories of this letter, are professors and scholars of law, business, economics, and public policy with expertise in industrial organization, distribution, competition, intellectual property, innovation and related fields. We write to express our concerns regarding the recent decision of the New Jersey Motor Vehicle Commission to prohibit direct distribution of automobiles by manufacturers.

The Motor Vehicle Commission’s regulation was aimed specifically at stopping one company, Tesla Motors, from directly distributing its electric cars. But the regulation would
apply equally to any other innovative manufacturer trying to bring a new automobile to market, as well. There is no justification on any rational economic or public policy grounds
for such a restraint of commerce. Rather, the upshot of the regulation is to reduce competition in New Jersey’s automobile market for the benefit of its auto dealers and to the detriment of its consumers. It is protectionism for auto dealers, pure and simple. We feel it is important to stress that we don’t have a stake in either side of this dispute. The value of our contribution arises from the independence of our position and our specialized knowledge, not about Tesla or New Jersey’s automotive market in particular, but about the way firms are organized, the way markets work and the economic consequences of the regulatory structure in which they operate. As we explain below, it is evident to us that the public interest is harmed by the regulatory prohibition on direct distribution of automobiles…”

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