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Finance and Economics Discussion Series
The Finance and Economics Discussion Series logo links to FEDS home page Information Sharing and Competition in the Motor Vehicle Industry
Maura P. Doyle and Christopher M. Snyder

Abstract: Up to six months ahead of actual production, U.S. automakers announce plans for their monthly domestic production of cars. A leading industry trade journal publishes the initial plan and then a series of revisions leading up to the month in question. We analyze a panel data set spanning the years 1965--1995, matching the production forecasts with data for actual monthly production. We show that a firm's plan announcement affects competitors' later revisions of their own plans and eventual production. The interaction appears to be complementary---large plans or upward revisions cause competitors to revise plans upward and increase production. The results are consistent with models in which firms share information about common demand parameters.

Keywords: Information sharing, motor vehicle production

Full paper (1880 KB PDF)

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Last update: July 16, 1997