This creates an opportunity for new auto chip suppliers, including Chinese firms, to enter the market. However, in the United States, direct manufacturer auto sales are prohibited in almost every state by franchise laws requiring that new cars be sold only by dealers. Many state laws impose upon manufacturers the precise terms under which they must compensate dealers for the costs associated with warranty repairs (these can incentivize dealers to increase the price of repairs to customers). Economists have characterized these laws as a form of rent-seeking that extracts rents from manufacturers of cars and increases costs for consumers of cars while raising profits for car dealers. Economists have characterized these regulations as a form of rent-seeking that extracts rents from manufacturers of cars, increases costs for consumers, and limits entry of new car dealerships while raising profits for incumbent car dealers. Tesla Motors has rejected the dealership sales model based on the idea that dealerships do not properly explain the advantages of their cars, and they could not rely on third-party dealerships to handle their sales. An example of a traditional single proprietorship car dealership was Collier Motors in North Carolina. Th is article has been wri tt en by GSA Conte nt Gener ator DEMO.
