• This thesis provides an inclusive analysis of policy action in the European car industry. It maps its development, processes, nature, and content and presents the story against a backdrop of changing economic realities and progressing European market integration. As such, it mainly covers the three decades between the years 1970 and 2000 which saw implementation of the most diverse policy measures; from those associated with the height of industrial activism of several European governments to those policy actions instituted by the Commission to make the European car sector compatible, at least in principle, with the Single Market. • This thesis also provides an estimation of the effect of these policies by measuring the extent of deviation from the Law of One Price, i.e. price dispersion. An original dataset is presented for car prices in the four largest European markets (Germany, France Italy and the UK) relative to the reference market (The Netherlands). The evidence shows that price dispersion was most pronounced during the period of industrial activism while the progressing unification of the Community market was accompanied by discernible price convergence. Estimations also show that implementation of protective policy measures led to relative price increases in the relevant markets and general price divergence, while abolition of these policies was followed by relative price decreases and general price convergence.