IDEAS home Printed from https://ideas.repec.org/h/nbr/nberch/8649.html
   My bibliography  Save this book chapter

The Eclipse of the U.S. Tire Industry

In: Mergers and Productivity

Author

Listed:
  • Raghuram Rajan
  • Paolo Volpin
  • Luigi Zingales

Abstract

This paper undertakes an in-depth analysis of the tire industry over the period 1970-1990. It attempts to uncover the causes and consequences of the acquisition activity in the industry in the 1980’s, which resulted in all but one large U.S. tire manufacturer being sold to foreign companies. We do not find that ownership was acquired by firms more efficient at managing the existing plants. Nor were the takeovers undertaken in response to the failure of internal control systems to induce downsizing. The most likely explanation is that the acquisitions were driven by an increase in cross-border production and trade by automobile manufacturers. This increased the need for cross-border production by the tire manufacturers that, in a slow growth industry, could only happen through acquisitions. U.S. manufacturers became the natural targets of this wave of acquisitions because they had delayed investment in the radial technology and, thus, had high costs of staying in the industry.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Raghuram Rajan & Paolo Volpin & Luigi Zingales, 2000. "The Eclipse of the U.S. Tire Industry," NBER Chapters,in: Mergers and Productivity, pages 51-92 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:8649
    as

    Download full text from publisher

    File URL: http://www.nber.org/chapters/c8649.pdf
    Download Restriction: no

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baker, Malcolm & Pan, Xin & Wurgler, Jeffrey, 2012. "The effect of reference point prices on mergers and acquisitions," Journal of Financial Economics, Elsevier, vol. 106(1), pages 49-71.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberch:8649. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: () or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.