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Would You Buy a Honda Made in the United States? The Impact of Production Location on Manufacturing Quality

Author

Listed:
  • Nicola Lacetera

    (University of Toronto)

  • Justin Sydnor

    (University of Wisconsin-Madison)

Abstract

Are location-specific factors important for understanding firms’ heterogeneities? We examine prices and quality metrics for Japanese cars at wholesale auctions, comparing otherwise identical cars assembled in the United States versus Japan. We find similar values regardless of country of assembly. These results indicate that Japanese automakers in general have successfully transferred their practices to their U.S. transplants and that there is no inherent limitation to high-quality automobile production in the United States. Deeper analysis of patterns for Toyota cars, complemented by historical analysis, suggests that although it is possible to transfer standards, quality convergence can require conscious effort and not just cumulative production.

Suggested Citation

  • Nicola Lacetera & Justin Sydnor, 2015. "Would You Buy a Honda Made in the United States? The Impact of Production Location on Manufacturing Quality," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 855-876, October.
    • Handle: RePEc:tpr:restat:v:97:y:2015:i:4:p:855-876
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    File URL: http://www.mitpressjournals.org/doi/pdf/10.1162/REST_a_00479
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    Cited by:

    1. Montag, Felix, 2022. "Mergers, Foreign Entry, and Jobs: Evidence from the U.S. Appliance Industry," CEPREMAP Working Papers (Docweb) 2207, CEPREMAP.

    More about this item

    Keywords

    automobile production; manufacturing quality; production location; Japanese cars; Honda; Toyota; U.S. production; automakers;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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