Consider a city with two car dealers, a Toyota dealer and a Honda dealer. Initially, the distance between the dealers is three miles. The Toyota dealer wants to relocate to a site adjacent to the Honda dealer and submits a rezoning request to the City Council. The Honda dealer responds to the rezoning request with the following statement: "One of the lessons from basic microeconomics is that an increase in supply will decrease price. If the Toyota dealer moves to the site adjacent to my dealership, the local supply of cars will increase, and I'll have to cut my prices to sell the same quantity of cars." Critically appraise the Honda dealer's statement and reasoning.