Week 9 Assignment 4
Managerial Economics and Globalization – ECO550
December 4, 2010
The industry chosen to discuss an oligopoly is the automotive industry, specifically General Motors as the firm. General Motors is considered to be one of the big three automakers in the United States and among the top five automotive producers in the world. General Motors has gross revenue of $34.1 billion and $2.0 billion net income as of September 30th 2010 which makes it poised to be second largest automaker in the United States (gm.com/investors/earnings-releases, 2010). As the second largest automaker in the U.S., General Motors employees over 209,000 people in every major region of the world to include a presence in 120 countries (gm.com/corporate/about, 2010).
Since General Motors is one of very few automotive producers which maintains a significant portion of the market share, and is among the dominant automotive producers in the world, it would qualify as an oligopoly. In addition, as a dominant automotive producer, it certainly has a controlling factor in the market as it pertains to production and price. Another area which would characterize General Motors as an oligopoly would be how the company’s product is standardized and produced to achieve the highest quality and efficiency. Very seldom does General Motors use price to dominate over another competitor, however in the current recession, price wars have become more prevalent. Moreover, General Motors plans to introduce new or improved features, financing, and other non-price factors to compete against other automotive makers. Later in this paper deciding factors in the economy will be discussed in relation to General Motors such as gross domestic product, inflation (GDP), and unemployment. Oligopolies are considered to be a significant factor within the macro-economy.
In order to analyze the current economic state several deciding factors within the economy must be gathered such as GDP,...