If major domestic auto producers are given a bailout for their financial troubles, what will be the market effect on domestic and foreign auto producers?

If the domestic auto producers are given a bailout for financial troubles, it will increase the domestic auto production level and decrease the foreign auto production level. It will also increase the rate of competition locally and internationally.

A bailout will create a better financial condition and status for domestic auto producers hence increasing the level of local production and competition. On the other hand, it will increase local competition and may greatly negatively influence the level of foreign sales and competition. This may discourage new foreign and domestic firms from entering the market due to the high competition levels.