American automakers buy auto parts from independent suppliers rather than produce the parts themselves. In the 1980s, Chrysler got about 70 percent of its auto parts from independent suppliers, while Ford got about 60 percent and General Motors got 25 percent. A decade earlier, the proportions were 50 percent at Chrysler, 5 percent at Ford, and 20 percent at General Motors.

Source: The Cato Institute Policy Analysis, 1987

a. Why did American automakers decide to outsource most of their parts production?

b. Explain why independent producers of auto parts are more efficient than the automakers.