Ontario Government purchases stake in Chrysler - Hawk Dove and Crowding Out

The Canadian Federal and Ontario Governments have decided to take a 2% equity stake in Chrysler. I don't know how Harper and McGuinty can make the justification that the "survival of GM and Chrysler were critical to the economic future of the province, and the country as a whole" when people essentially vote with their money by not purchasing cars and stating the exact opposite. Not to mention that other car companies seem to be suffering but surviving without government help (Toyota, Honda, etc).

Now a clever observer would ask: "Isn't criticizing Harper and McGuinty just politics as usual? Aren't they just copying the Obama administrations actions for improve the auto industry?" I would propose while it appears that way, this is hardly the case. The US administration has been constantly demanded reforms in the company such as ousting Rick Wagoner as CEO of GM, and the divesture of brands such as Pontiac. Their Canadian counterparts have made no such comparable efforts (mostly because they seemingly lack the leverage, but even if that appears to be the case its seems their money is still good).

Using a two by two matrix similar to the Hawk Dove model, it's easier to understand what's going on. If both the US government and Canadian government do nothing, the both economies will suffer. If one decides to bailout the automaker in their economy, the manufacturer will keep more capacity (jobs) in that country. If they both bail out the automaker, the manufacture will continue to split the capacity (jobs retained) between them, but more inefficiently (with the economic dead weight loss born indirectly by the tax payers through the government). Essentially, in that last scenario, they are fighting for the last piece of a rotten pie.
While the model show here is overly simplified (numbers are deliberately shown as negative values to show that this investment is essentially a "race for last" to see who will lose out the least), I hope it illustrates a few points. First, the numbers depict value as described by jobs lost. In any scenario (even with government intervention) jobs will be lost on both sides of the border. That is a given assumption.

The next point of note is that the Hawk Dove model shows that the two governments are essentially crowding each other out with their "investments" and that there is a sharp diminishing return.

While the weighting of each variable is highly debatable, I believe that the underlying logic and framework is fairly solid in describing the behaviour and results of each government in this arena.