3/31/2005

future of US cars

www.msnbc.msn.com/id/7329860/

Above is the address of an article on us cars makers and their asian competitors. I think that they are good examples of monopolistic competitive firms. Until reciently US auto makers have made alot on pickups now companies like toyota are trying to get in on that market as well. Monopolistic competitive firms make a product that is different but with time people start to copy and take away their competetive edge. In the case of US auto makers I think that if they cant turn things around or come up with a new "different" product they could go under.

1 comment:

Dr. Tufte said...

-3 on Mack's post for a poorly formatted link, and many spelling errors.

I think Mack is right that automakers are monopolistically competitive. This implies zero profits on existing brands in the long-run, the change for positive profits on new brands in the short-run, and excess capacity in the long-run. Sounds a lot like Detroit to me.