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A driver in every car: when the auto industry says jump, do governments say “how high?”

A driver in every car: when the auto industry says jump, do governments say “how high?” PurposeThe purpose of this paper is to analyse the economic and political conditions that could explain why the governments in developed economies have intervened in the automobile industry. The author identifies the main reasons and the shortcomings of these public interventions.Design/methodology/approachThe paper presents different forms of public intervention in the automobile industry of various countries over the past few decades: infant industry, research and development (R&D), global climate change and global systemic crisis.FindingsThe automobile sector is viewed by governments as a key sector and is subsidised for different reasons at different periods. The paper shows that governments give different reasons for public intervention in the automobile industry (infant industry, global climate change, R&D externalities, the global financial crisis, etc.). Whatever the theory, in practice, public interventions have a strong impact on the industry and its evolution.Practical implicationsThe paper highlights the importance for car manufacturers of monitoring the political initiatives of public authorities, which can affect the technological evolution of the automobile industry.Social implicationsFor households, the purchase of a car is quite important, and the political orientation of public subsidies in favour of one option over another, such as electric vehicles or an autonomous car, affects their choice.Originality/valueThe paper examines an issue which has not previously been addressed by journals, yet which is crucial, i.e. the impact of government decisions on the evolution of an industry. The approach can also be applied to other sectors. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Strategy Emerald Publishing

A driver in every car: when the auto industry says jump, do governments say “how high?”

Journal of Business Strategy , Volume 38 (4): 8 – Jul 17, 2017

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0275-6668
DOI
10.1108/JBS-06-2016-0055
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to analyse the economic and political conditions that could explain why the governments in developed economies have intervened in the automobile industry. The author identifies the main reasons and the shortcomings of these public interventions.Design/methodology/approachThe paper presents different forms of public intervention in the automobile industry of various countries over the past few decades: infant industry, research and development (R&D), global climate change and global systemic crisis.FindingsThe automobile sector is viewed by governments as a key sector and is subsidised for different reasons at different periods. The paper shows that governments give different reasons for public intervention in the automobile industry (infant industry, global climate change, R&D externalities, the global financial crisis, etc.). Whatever the theory, in practice, public interventions have a strong impact on the industry and its evolution.Practical implicationsThe paper highlights the importance for car manufacturers of monitoring the political initiatives of public authorities, which can affect the technological evolution of the automobile industry.Social implicationsFor households, the purchase of a car is quite important, and the political orientation of public subsidies in favour of one option over another, such as electric vehicles or an autonomous car, affects their choice.Originality/valueThe paper examines an issue which has not previously been addressed by journals, yet which is crucial, i.e. the impact of government decisions on the evolution of an industry. The approach can also be applied to other sectors.

Journal

Journal of Business StrategyEmerald Publishing

Published: Jul 17, 2017

References

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