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
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