Comments on: Why Toyota wants GM to be saved: a game theory case study

By: Janee Jones

Janee Jones — Fri, 17 Dec 2010 21:40:59 +0000

Well an oligopoly is a market dominated by a small number of participants who are able to collectively exert control over supply and market prices. So I would say that this situation does relate to what we learned in chapter 10 about oligopoly. It seems as though Toyota and Honda are the participants who can exert the most control over the supply of auto parts and market prices by endorsing some of the federal aid.

I learned that in general, businesses would rather sink their competition in order to be on top, but in cases where sinking a competitor, all will lose, it is in their best interest to keep their competitor afloat so no new competitors can come in and dominate the industry.

By: Presh Talwalkar

Presh Talwalkar — Thu, 21 May 2009 06:32:11 +0000

BrianSJ: I know this reply is quite late, but given current news about GM and chapter 11, I guess we’ll have to see how it all turns out.

Good point about Toyota’s diplomacy against protectionist fears.

By: BrianSJ

BrianSJ — Tue, 10 Feb 2009 18:15:12 +0000

If GM went into Chapter 11, it would emerge much stronger. As it is, it keeps its dreadful management and is saddled with pork-barrel politics as well.
If Toyota were seen to be against the bailout, it might provoke a very strong protectionist reaction. Just as Toyota is launching a car completely designed in the US for the US market.
Dominant players in a market need to avoid getting into anti-competitive positions. I seem to associate Heineken beer with not being too aggressive on these grounds.

By: Presh Talwalkar

Presh Talwalkar — Wed, 17 Dec 2008 23:10:24 +0000

Thanks Eyal and Kent for pointing out the correction…

Rob: Good counter-points about the other side. One of the disadvantages of analyzing real events is we don’t know what everyone is thinking–we have to guess. We do know that Toyota is giving some support for federal aid…so these are three reasons why. Perhaps it is a miscalculation on their part?

I would be really curious what would happen if someone like Tata came into the American market. I recall the buzz about the Nano, a $2,000 car several months ago:

http://en.wikipedia.org/wiki/Tata_Nano

By: Kent

Kent — Tue, 16 Dec 2008 22:22:58 +0000

” The more cars that are sold-regardless of who sells them-the greater demand there is for parts, and consequently, the lower the price will be for everyone.” Someone beat me to commenting on greater demand = lower cost statement. Economies of Scale in the supply chain are what will be hurt by falling demand. The thrust of your argument remains unhurt be this little detail, so don’t worry about it.