This thesis presents a quantitative analysis of the market demand for automobiles in Korea. Up to now, many different concepts have been suggested to analyze the structure of automobile market. Among them Stock Adjustment concept is adopted in this thesis because of the data availability in Korea.
Most previous demand models used purchasing power, purchase price or user cost, proxy for energy crisis, and stock as their explanatory variables. In this thesis these variables and others are used as explanatory variables of the demand model. This model is tested for statistical significance and acceptability with the data for 14 years period from 1965 to 1978 using Ordinary Least Squares (OLS) method and Seemingly Unrelated Regression Estimation (SURE) method.
Statistically acceptable results are obtained using both OLS and SURE method. The models estimated by OLS are used to explain past automobile market demand and the models estimated by SURE are used to forecast the future demand for automobiles according to their relative theoritical and practical implication.
The results of the above forecast show that the economies of scale can be achieved in the automobile industry of Korea at least until 1984.
