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.

5 comments:

sandy said...

One thing to remember is that whether the U.S. or Asia has the monopolistic edge on an automobile market, the monopolist faces indirect competition for the consumer's dollar from all other commodities. I am sure if the U.S. auto industry faces serious threats, the government will step in to tariff foreign automobiles enough to make them much less appealing. Just for the record, I would not be in favor of such an action. That's a another issue I could go on about.

rico said...

U.S. automakers are going to be just fine. The Asian companies will be too busy producing cars for China and India, that American companies will get back the local market share that they once had.

Dale said...

GM and Ford are the two biggest auto producers in the world, and their sales are alright, even the truck sales are good to work with. Sales for these two companies dropped in the United States last month, but still have a positive outlook for April. However, GM and Ford do have their work cut out for them, because the Asian brands have hit a record demand.

BOB said...

Foreign car companies are beginning to realize that their products offer a higher quality. The car market is largely dominated by foreign competitors because they make a better, more reliable car. The same will be true with the truck market in a number of years.

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.