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Making Cars and Making Money in the Interwar Automobile Industry: Economies of Scale and Scope and the Manufacturing behind the Marketing

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  • Raff, Daniel M. G.

Abstract

Many observers of the American automobile industry have focused on Ford's development of mass production shortly before the First World War; they have then moved to General Motors's success in the 1920s, usually attributing it to a marketing innovation, the introduction of the annual model change. This article argues that the emphasis on GM's marketing strategy is misplaced and that profound changes in the organization of production, exploiting the economies of common parts, were far more fundamental. Rough calculations of the cost structure involved in the rise of the Chevrolet to mass market domination are presented to support this interpretation.

Suggested Citation

  • Raff, Daniel M. G., 1991. "Making Cars and Making Money in the Interwar Automobile Industry: Economies of Scale and Scope and the Manufacturing behind the Marketing," Business History Review, Cambridge University Press, vol. 65(4), pages 721-753, January.
    • Handle: RePEc:cup:buhirw:v:65:y:1991:i:04:p:721-753_06
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    Cited by:

    1. Richard N. Langlois, 2002. "Modularity in Technology and Organization," Chapters, in: Nicolai J. Foss & Peter G. Klein (ed.), Entrepreneurship and the Firm, chapter 2, Edward Elgar Publishing.
    2. Wilson, Charlie, 2012. "Up-scaling, formative phases, and learning in the historical diffusion of energy technologies," Energy Policy, Elsevier, vol. 50(C), pages 81-94.
    3. Nicholas Argyres & Lyda Bigelow, 2007. "Does Transaction Misalignment Matter for Firm Survival at All Stages of the Industry Life Cycle?," Management Science, INFORMS, vol. 53(8), pages 1332-1344, August.
    4. Bigelow, Lyda S. & Argyres, Nicholas, 2008. "Transaction costs, industry experience and make-or-buy decisions in the population of early U.S. auto firms," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 791-807, June.
    5. Daniel M. G. Raff & Manuel Trajtenberg, 1996. "Quality-Adjusted Prices for the American Automobile Industry: 1906-1940," NBER Chapters, in: The Economics of New Goods, pages 71-108, National Bureau of Economic Research, Inc.

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