American automobile manufacturers experienced a bitter-sweet time during the 1980s. On one hand, they gained support from the government to prevent mass imports of small cars from Japan; while on the other hand, they still lost market share to their Japanese counterparts and ever since then, they have been facing fierce competition from the Japanese auto-makers. To better understand today s competition in the automobile market, it is crucial to study the industry in the 1980s when the scope of the market began to change. This paper focuses mainly on studying the compact car market in the 1980s, which was the primary competition field then. It first briefly introduces the rise of Japanese automobile industry, and the economic background of the decade. Then it examines the U.S. compact car segment in detail, and finally constructs a model to explain consumer decisions on purchasing compact cars. In the end, it gives suggestion to the Big Three companies according to the findings presented in this paper.

Thesis (M. S.)--Economics, Georgia Institute of Technology, 2008. / Committee Chair: Ghosal, Vivek; Committee Member: Iacopetta, Maurizio; Committee Member: Kilic, Rehim.