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February 10, 2010



Chris: your quip about Toyota using common parts leads to the wrong conclusion. Sharing of components is as old as serial automobile production. In 1910 and 1920, small manufacturers couldn't build their own engine so they bought one from Anzani or Meadows. In mass production cars of the 1930s onwards, you'll find electrics from Lucas, Bosch, Magneti Marelli; carburettors from SU, Weber, Stromberg, Solex; gear boxes from ZF, Borg Warner; and many more examples.

Aside from economies of scale, this was good because if a mechanic was familiar with the component in one car, skill and knowledge was transferrable. Design deficiencies were also spotted. If the team at Morris failed to identify a problem, perhaps a smaller company might be more critical.

What went wrong at Toyota was that an accelerator component was designed for/by the company; it wasn't a shared component; it was a Toyota component, further used in a couple of cars based on a Toyota design. When the component demonstrated deficiencies, Toyota succumbed to bias and blamed consumers.


Could it be, therefore, that many high businessmen’s high reputation rests not so much upon genuine skill as upon luck?

That and an eye for the main chance.

David Friedman

I've argued in the past that this problem explains why a firm large enough to self-insure its many factories might choose to buy insurance anyway--because its own managers have an incentive to take inefficiently low precautions, in the knowledge that if the low probability/high cost event does happen they won't bear much of the cost.

I like to describe the pattern as "moral hazard as a feature." Insurance transfers the risk to a firm better able to control it than the owner.

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Every time there are risk in the companies, the most important thing is looking for the better option. The companies must to lower production costs.

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Well done !! good work done by You

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Maybe the Toyota problems are much wider and are problem of the industry itself, when the safety problems was only the trigger?
I hope that cars and trucks keep on being reliable and good, and also eco friendly.

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