Gasoline Prices and the American Auto Industry: Repeated Environmental Shocks in a Unique Framework

Abstract

Through a case study on the American automobile industry and the gasoline price shocks during 1973-1974 and 1978-1980, we explore the effects of multiple, external shocks on organizational learning. This paper provides three contributions. First, we bifurcate two components of organizational learning by separating knowledge acquisition from knowledge implementation. Second, although many papers have explored the effect of a single exogenous shock, we are the first to look at the effect of repeated, identical shocks. Third, while numerous studies have used this setting to examine consumer responses, we are the first to analyze the producers' response to gasoline shocks.