Further Evidence of Discrimination in New Car Negotiations and Estimates of Its Cause

Abstract

A 1991 test of new car dealerships in Chicago indicated that dealerships offered significantly lower prices to white male testers than to similarly situated black and-or female testers: white female testers were asked to pay 40% higher markups than white male testers; black male testers were asked to pay more than twice the markup of white male testers; and black female testers were asked to pay more than three times the markup of white male testers. This article extends the results of this initial test by presenting not only more authoritative evidence of discrimination but also a new quantitative method of identifying the causes of discrimination.