International joint ventures and the U.S. auto industry

In 1983 General Motors Inc. and Toyota Inc. formed a joint venture, the New United Motor Manufacturing Inc., to assemble autos in the United States. For Toyota, the venture was a first attempt to locate production in America. General Motors viewed the venture as a means of learning how to produce low-cost, high quality, small vehicles. Facing an onslaught of anti-union Japanese firms, the United Auto Workers had to demonstrate that unions would not be an impediment to Japanese production in the United States. By 1986 the venture was termed a success. This paper considers the welfare effects of international joint ventures among competing manufacturers, as applied to the U.S. auto industry