The Automobile Industry and New Trade Theory: A Classroom Experiment

Yamarik, Steven 2018. "The automobile industry and new trade theory: A classroom experiment," The Journal of Economic Education, vol. 49(3), pages 252-259

Posted: 26 Aug 2018

See all articles by Steven Yamarik

Steven Yamarik

California State University, Long Beach - Department of Economics; Henan University

Date Written: August 2018

Abstract

In this study, the author describes a classroom experiment on new trade theory appropriate for undergraduate international economics and trade courses. Students portray U.S. and Japanese automobile manufacturers with different average cost schedules. There are five rounds in the experiment, starting with autarky in the 1960's and ending with the Great Recession of 2008–9. In each round, the instructor announces a market price and quantity and then each producer calculates its market share, average cost and profit; and makes its shutdown decision. By varying the market price and size, the experiment illustrates the gains from intra-industry trade and also how efficiency gains and economic recession impact individual firm performance.

Keywords: Economic Instruction, Flipped Classroom, Academic Performance

JEL Classification: A20, A22

Suggested Citation

Yamarik, Steven, The Automobile Industry and New Trade Theory: A Classroom Experiment (August 2018). Yamarik, Steven 2018. "The automobile industry and new trade theory: A classroom experiment," The Journal of Economic Education, vol. 49(3), pages 252-259, Available at SSRN: https://ssrn.com/abstract=3232245

Steven Yamarik (Contact Author)

California State University, Long Beach - Department of Economics ( email )

1250 Bellflower Blvd
Long Beach, CA 90840-4607
United States

HOME PAGE: http://www.csulb.edu/~syamarik

Henan University ( email )

85 Minglun St. Shunhe
Kaifeng, Henan 475001
China

HOME PAGE: http://cfds.henuecon.education/index.php/research/data/yes-capital-data

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