A car manufacturing company invests in new robotics, which doubles the number of cars each employee can assemble per day. In the same month, several new international car companies begin selling their vehicles in the domestic market for the first time. Considering these two events, what is the most likely impact on the original company's profit-maximizing price markup over its costs?

Market Competition and Price Markups

An increase in a firm's labor productivity will, all else being equal, lead to an increase in its profit-maximizing price markup over costs.

Analyzing Market Changes on a Firm's Pricing Strategy