Transportation Policy and Planning Discussion Economics Question
Case Study 1: Cadillac, After Years of Struggle, Has Found Its Sweet Spot: China, by Mike Colias | Aug 30, 2017
Cadillac’s global sales are increasing and it now sells more vehicles abroad than at home. Contributing to this growth is the firm’s success in China, where it has grown to be the country’s fourth largest luxury auto brand. Cadillac’s success is being supported by its decision to produce many of the cars in China to avoid a 25% tariff on imports. The firm also modifies its products to accommodate local consumer preferences, such as providing plush rear seats with high-definition TV screens, since many Chinese buyers of Cadillacs use a chauffeur.
What factors have contributed to Cadillac’s success in China?
How could Cadillac differentiate its products to gain market share against the “B-B-A” (i.e., BMW, Benz and Audi) in China?
What unique opportunities and challenges face global auto companies wanting to increase sales in China?
How could Cadillac increase sales in the United States?
Transportation Policy and Planning Discussion
Discuss the utility theory and its assumptions.
Assignment: The trade game is a way of examining how economic trading of resources affects individual utility. Imagine the economy consists of the following resources (denoted by colored slips of paper):
The objective of the game is to maximize your gains in utility.
Define A Utility Function for Yourself
U = f (White, Purple, Brown, Orange, Blue, Gray, Green, Yellow, Gold)
You are handed an assortment of resources
Measure your utility
Trade with others within your family or friends (15 minutes). Record your trades.
At the end of the trading period measure your utility again. Compute your absolute and percentage increase.
Record scores on a sheet of paper. Discuss if there is a better way to allocate resources?