Suppose that Honda is on the verge of signing a 15-year contract with TRW to supply airbags.
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Suppose that Honda is on the verge of signing a 15-year contract with TRW to supply airbags. The terms of the contract include providing Honda with 85 percent of the airbags used in new automobiles. Just prior to signing the contract, a manager reads that one of TRW’s competitors has introduced a comparable airbag using a new technology that reduces the cost by 30 percent. How would this information affect Honda’s optimal contract length with TRW?
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Related Book For
Managerial Economics and Business Strategy
ISBN: 978-0071267441
7th Edition
Authors: Michael R. baye
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