Finance and Economics Discussion Series (FEDS)
February 1997
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
PDF: Full Paper
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