Analysis of the Motor Vehicles industry.
STAGE I: Introduction
In the introduction, there are three things to include:
a) Clearly state the name of the industry that you wish to understand more or explain. Next, identify the problem leading up to the study of it, such as high-cost industry; little competition or not; is it capital- or labor-intensive etc.? Here, you may also include a brief background of your industry. A list of possible industries is shown in chapter 7 in your textbook. Once you have decided on the name of your industry as your topic, locate its corresponding six-digit NAICS code, and state how you plan to collect your data. Also, state whether your industry is operating in foreign countries (export and import), and if so, offer examples of some exporting and importing countries.
b) State the importance of resolving the problem facing the industry in the US economy. For example, if you choose the Airline Industry, you may wish to find out whether the industry is competitive or not.
c) State the purpose or the central theme of your paper. The purpose is to two-fold:
i) Theoretical: that is to explain how structure influences conduct and subsequently the performance of the industry.
ii) Empirical: to collect data on profit and the explanatory variables, and show whether a long-term relationship exists between profit and concentration ratio. Regression Model is on P.84
STAGE II: Body of the paper…………………………………………………….. (70%)
In this section, discuss the theoretical framework and empirical findings of your industry.
Purpose: To offer an analysis of the industry in terms of its structure, conduct and performance. The research question is whether structure and conduct influence the performance of the industry over time.
Theory: The standard theoretical framework or paradigm states that the industry’s structure influences the pricing, and thus the profitability of the industry.
Theoretical Framework: Show how the independent variables affect the performance (dependent variable) of the industry over the past ten years. A measure of performance is profit or net revenue. The key independent variables are concentration ratio (CR4), Market size and Technology. Here, you will define and show the theoretical relationship (state whether it is positive or negative) and then offer some evidence from the existing literature.
Empirical Findings:
Research question: IS the long-run profit increasing or decreasing over time. Use secondary data and existing literature to answer my research question
