Download or read book Empirical Analysis of Firm Behavior in the U S Auto Industry written by Kristof Zetenyi and published by . This book was released on 2014 with total page 106 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This thesis conducts an examination of firm behavior in the auto industry as a response to new federal legislation and business cycle fluctuations. Chapter 1 analyzes the gaming opportunities of the new CAFE standard that sets lower fuel efficiency standards for larger vehicles and thus provides an incentive for firms to increase vehicle size and ease compliance. I use an oligopolistic equilibrium model of endogenous characteristic choice where firms choose to update a vehicle characteristic and pay the associated fixed costs or keep the characteristic from the previous year unchanged. I estimate a discrete-choice model of new vehicle demand and use a moment inequality approach to set-identify the fixed costs of modifying characteristics. Simulations show that the new legislation will have no market level impact on the size distribution with only a select few vehicles being upsized under the new CAFE. I find that firms increase the average price of their new vehicles by $330-440 with a pricing strategy that shifts demand away from less fuel-efficient vehicles toward more efficient alternatives and place a larger price premium on vehicles with higher CAFE compliance costs. I show that models without fixed costs significantly overestimate the impact of the legislation. Chapter 2 attempts to answer two questions regarding inventory fluctuations. The first question is to what extent markups drive inventory fluctuations throughout the business cycle. The second question is whether inventory management can explain a 'trade collapse' during the Great Recession. These questions are answered by analyzing sales and inventory data on every vehicle model sold in the U.S. from 2004 to 2013. The results indicate that there is a strong positive relationship between markups and the inventory-to-sales ratio, corroborating predictions in the stock-out avoidance model. However, no evidence is found to indicate that the inventory-to-sales ratio behaved differently between imports and domestics during the Great Recession"--Page iii.
Download or read book Competitive Pricing Behavior in the Us Auto Market written by K. Sudhir and published by . This book was released on 2002 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a competitive marketplace, the effectiveness of any element of the marketing mix is determined not only by its absolute value, but its relative value with respect to the competition. For example, the effectiveness of a price cut in increasing demand is critically related to competitors' reaction to the price change. Managers therefore need to know the nature of competitive interactions among firms. In this paper, we take a theory-driven empirical approach to gain a deeper understanding of the competitive pricing behavior in the US auto market. The ability-motivation paradigm posits that a firm needs both the ability and the motivation to succeed in implementing a strategy (Boulding and Staelin, 1995). We use arguments from the game theoretic literature to understand firm motivation and abilities in different segments of the auto market. We then combine these insights from the game theoretic literature and the ability-motivation paradigm to develop hypotheses about competition in different segments of the US auto market. To test our hypotheses of competitive behavior, we estimate a structural model that disentangles the competition effect from the demand and cost effects on prices. The theory of repeated games predicts that firms with a long run profitability objective will try to sustain cooperative pricing behavior as a stable equilibrium if conditions permit. For example, markets with high concentration and stable market environments are favorable for sustaining cooperative behavior and therefore provide firms with the ability to cooperate. The theory of switching costs suggests that in markets where a firm's current customers tend to be loyal, firms have a motivation to compete very aggressively for new customers, recognizing the positive benefits of loyalty from the customer base in the long run. As consumer loyalty in the market increases, the gains from increasing market share by aggressive competitive behavior are more than offset by losses in profit margins. Firms therefore have the motivation to price cooperatively. Empirically, we find aggressive behavior in the mini-compact and subcompact segments, cooperative behavior in the compact and midsize segments and Bertrand behavior in the full-size segment. These findings are consistent with our theory-based hypotheses about competition in different segments. In estimating a structural model of the auto market, we address several methodological issues. A particular difficulty is the large number of car models in the US auto market. Existing studies have inferred competitive behavior only in markets with two to four products. They also use relatively simple functional forms of demand to facilitate easy estimation. Functional forms of demand however impose structure on cross-elasticities between products. Such structure if inappropriate can bias the estimates of competitive interaction. We therefore use the random coefficients logit demand model to allow flexibility in cross-elasticities. We also use recent advances in New Empirical Industrial Organization (NEIO) to extend structural estimation of competitive behavior to markets with a large number of products. We use the simulation based estimation approach developed by Berry, Levinsohn and Pakes (1995) to estimate our model. A frequent criticism of the NEIO approach is that its focus on industry specific studies limits the generalizability of its findings. In this study, we retain the advantages of NEIO methods, but partially address the issue of generalizability by analyzing competitive behavior in multiple segments within the auto industry to see if there is a consistent pattern that can be explained by theory. Theoretical modelers can use our results to judge the appropriateness of their models in predicting competitive outcomes for the markets that they analyze. A by-product of our analysis is that we also get estimates of demand and cost apart from competitive interactions for the market. Managers can use these estimates to perform "what-if" analysis. They can answer questions such as what prices to charge when a new product is introduced or when an existing product's characteristics are changed.
Download or read book Empirical Evidence for Collusion in the U S Auto Market written by Val Eugene Lambson and published by . This book was released on 1992 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: A supergame theoretic price-setting model of collusion is calibrated to data from the North American passenger car market before, during, and after the voluntary restraint arrangements (VRAs) with Japan. Conclusions about whether the model is consistent with the bans from the various regimes depend on assumptions about market structure, demand elasticities, and discount factors. If one believes that the price elasticity of auto demand is about one, for example, then the calibrations suggest that in, the pre-VRA and VRA regimes, only General Motors and Ford could conceivably have colluded, and even this limited potential broke down in the post-VRA regime.
Download or read book Interdependent Pricing and Markup Behavior written by Ernst R. Berndt and published by . This book was released on 1990 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we show how to adapt the traditional contingent claims valuation techniques to correctly value the firm and its liabilities in the presence of agency costs. This enables us to measure the significance of the agency costs as a function of the quantity of debt outstanding and as a function of the design of the debt contract: with this we can determine the relative benefits of alternative contract design. Our work makes a contribution to the recent database about how much debt a corporation can prudently assume. It is possible to measure the agency advantages of the new debt instruments for a given firm, and therefore to determine for which firms the advantages are significant and for which firms they are not.
Download or read book Short Sighted Solutions written by and published by . This book was released on with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Effects of Oligopoly in the Us Automobile Sector on Pricing and Development written by Ricardo Falter and published by GRIN Verlag. This book was released on 2011-08 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2010 in the subject Business economics - Trade and Distribution, Maastricht University, language: English, abstract: The US automobile industry is a good example of an oligopoly. It consists mainly of three major firms, General Motors (GM), Ford, and Chrysler. The influence of this oligopoly can be seen in the prices and the development and introduction of new car models into the American car market. Extensive work has been done on the field of collusive behaviour in the US automobile market and moreover the introduction of the small car in the 1950s shows how the firms collude when it comes to the introduction of a new car.
Download or read book Behavior of an Auto Firm Under the Fuel Economy Constraint written by John E. Kwoka and published by . This book was released on 1980 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Competitive Status of the U S Auto Industry written by Commission on Engineering and Technical Systems and published by . This book was released on 1982 with total page 228 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Interdependent Pricing and Makeup Behavior written by Ernst R. Berndt and published by . This book was released on 1990 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Production and Inventory Behavior of the American Automobile Industry written by Olivier J. Blanchard and published by . This book was released on 1982 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: Understanding inventory movements is central to an understanding of business cycles. This paper presents an empirical study of the behavior of inventories in the automobile industry. It finds that inventory behavior is well explained by the assumption of intertemporal optimization with rational expectations. The underlying cost structure appears to have substantial costs of changing production as well as substantial costs of being away from target inventory, the latter being a function of current sales. Given this cost structure, whether inventory behavior is stabilizing or destabilizing depends on the characteristics of the demand process. In the automobile industry, inventory behavior is destabilizing: the variance of production is larger than the variance of sales.
Download or read book Empirical Studies of Strategic Trade Policy written by Paul Krugman and published by University of Chicago Press. This book was released on 2007-12-01 with total page 260 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the 1980s, economists have used the concept of strategic trade policy, which takes account of imperfect competition and increasing returns in the international marketplace, to criticize conventional views about free trade. According to the new view, a government can take strategic steps to raise its income at another country's expense—by subsidizing exports or erecting trade barriers, protecting certain firms from foreign competition, or promoting the development of new industries. This volume looks at the experience of specific industries in order to determine the effectiveness of strategic trade policy in promoting economic growth. The nine papers cover the U.S. and European auto industries, the U.S. steel industry, the commercial aircraft industry, airline deregulation in Scandinavia, and labor and industrial policy in Korea and Taiwan. The authors refine the basic techniques for measuring policy effectiveness, extend them to encompass industry dynamics, and test the implications of new trade models. International economists and trade experts in government and business will find important new insights into the role of strategic trade policy in international competitiveness.
Download or read book Capital beyond Borders written by Kenneth P. Thomas and published by Springer. This book was released on 2016-07-27 with total page 209 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book challenges the established wisdom regarding the balance of bargaining power between multinational corporations and host governments. Most theories, beginning with Raymond Vernon's, claim that the bargaining power of host states should increase over time. This work shows the opposite is true, at least for the automobile industry in the industrialized world. The reason for this is the growing mobility of production, which undercuts host states' bargaining positions. Capital mobility is thus central to both firm-state relations and IPE generally.
Download or read book The Evolution of Innovation Networks written by Tobias Buchmann and published by Springer. This book was released on 2015-06-05 with total page 248 pages. Available in PDF, EPUB and Kindle. Book excerpt: Tobias Buchmann analyzes innovation network dynamics in the German automotive industry. The study is based on a model for analyzing the complex evolution of innovation networks and the driving mechanisms underlying network evolution derived from theoretical and empirical findings in innovation economics, economic geography and management science. The author uses established social network analysis (SNA) techniques and combines them with recent methodological developments in the analysis of network evolution.
Download or read book Firms Strategic Decisions Theoretical and Empirical Findings written by Kazuhiro Ohnishi and published by Bentham Science Publishers. This book was released on 2015-04-06 with total page 263 pages. Available in PDF, EPUB and Kindle. Book excerpt: This eBook presents recent case studies on firms and their strategy employed in specific scenarios and industries. Readers will find, in this volume, an analysis of oligopolistic industries done by using various economic models. These models attempt to explain changes to the competitive environment owing to strategic firm behavior, that is, on the assumption that firms are able to compete effectively and advantageously against rivals through applying strategic initiatives. This eBook investigates the behavior of profit-maximizing firms as well as labor-managed, state-owned and joint-stock firms. Fifteen chapters present empirical or theoretical findings, and develop the economic analysis of firm behavior.
Download or read book Handbook on the Economics and Theory of the Firm written by Michael Dietrich and published by Edward Elgar Publishing. This book was released on 2012-01-01 with total page 607 pages. Available in PDF, EPUB and Kindle. Book excerpt: This unique Handbook explores both the economics of the firm and the theory of the firm, two areas which are traditionally treated separately in the literature. On the one hand, the former refers to the structure, organization and boundaries of the firm, while the latter is devoted to the analysis of behaviours and strategies in particular market contexts. the novel concept underpinning this authoritative volume is that these two areas closely interact, and that a framework must be articulated in order to illustrate how linkages can be created. This interpretative framework is comprehensively developed in the editors' introduction, and the expert contributors – more than fifty academics of renowned authority – further elaborate on the linkages in the seven comprehensive sections that follow, encompassing: background; equilibrium and new institutional theories; the multinational firm; dynamic approaches to the firm; modern issues; firms' strategies; and economic policy and the firm. Bridging economics and theory of the firm, and providing both technical and institutional perspectives on real corporations, this path-breaking Handbook will prove an invaluable resource for academics, researchers and students in the fields of economics, heterodox economics, business and management, and industrial organization.
Download or read book Employee Inter and Intra Firm Mobility written by Daniel Tzabbar and published by Emerald Group Publishing. This book was released on 2020-07-15 with total page 464 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume identifies new theoretical and empirical directions to the study of employee mobility, covering broad sets of theoretical frameworks—which are embedded in strategic, organizational, sociological or entrepreneurial theories—and of empirical approaches—which cover industry, firm, team and individual levels of analysis.
Download or read book The Dynamics of the U S Automobile Industry written by Dhrubajyoti Das Purkayastha and published by . This book was released on 1988 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt:
