UNCERTAINTY IN THE PRICE OF GASOLINE AND THE AUTOMOBILE MANUFACTURERS' 1990 RETOOLING DECISION

The authors present an analysis of the retooling decision of full-line automobile manufacturer facing large uncertainty in the price of gasoline. The paper focuses on the appropriate mix of five car classes to be produced in 1990. By calculating the severity of a possible market mismatch problem with different retooling decision, it is shown that the effect of different strategies that could minimize the adverse effects of world oil price uncertainty. The manufacturer's retooling decision is considered with (1) no competition, (2) competion from another full-line company, and (3) competition from another full-line company and a limited-line foreign manufacturer. Of particular interest is whether the market risks are so great that government intervention is required to assist the manufacturers in planning for an uncertain future. Specifically, the authors question whether the corporate average fuel efficiency standards should be extended past 1985 to encourage automobile manufacturers to retool for increased fuel efficiency in the face of highly uncertain gasoline prices.

• Corporate Authors:

  Pergamon Press, Incorporated

  Headington Hill Hall
  Oxford OX30BW,    
• Authors:
  • FORD, A
• Publication Date: 1984-6

Media Info

• Pagination: p. 519-540
• Serial:
  • Energy: An International Journal
  • Volume: 9
  • Issue Number: 6
  • Publisher: Pergamon Press, Incorporated

Subject/Index Terms

• TRT Terms: Automobiles; Competition; Decision making; Gasoline; Hazards; Manufacturing; Marketing; Prices; Risk assessment; Uncertainty
• Old TRIS Terms: Retooling
• Subject Areas: Highways; Safety and Human Factors; Vehicles and Equipment; I91: Vehicle Design and Safety;

Filing Info

• Accession Number: 00393879
• Record Type: Publication
• Source Agency: Energy Research Abstracts
• Files: TRIS
• Created Date: May 31 1985 12:00AM