Impacts of Changing Demand and Import Tariff Reduction on the Profit’s Automobile Firms

Abstract

This research aimed to analyze an effecting of decreasing demand and reduction of the protection in automobile’s industry. According to the economic integration of ASEAN has an eliminated ASEAN import duties. This research uses the time series data collected from year 1990 to 2014, totally 20 years. The demand functions have two equations which are domestic demand function and export demand function to analyze an impact on changed the protection of automobile industry and changing demand to automobile’s firm in Thailand.

The study shown the followings: 1) The factors significantly at the level .01 affecting domestic car demands are domestic car price; which the price elasticity of demand is -3.8457. Thai Gross Domestic Product (GDP) per capita; which the income elasticity of demand is 5.2196 and the dummy viable of first car policy which elasticity of demand is 0.4167. The factors significantly at the level .01 affecting export car demand are the export car price (P_f.o.b); which the price elasticity of demand is 11.6465 and the exchange rate; which  the elasticity is 8.3130 2) The elimination of import tariff from product of ASEAN has an impact of domestic car’s price reduction. It was related to demand increasing according to elasticity of demand from demand function, while it was affected to firm’s profit increased according to high price elasticity of demand. The producers can be produced with profitability even though to reduced industry protection.