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MARKET STRUCTURE AND PRICING STRATEGY OF CHINA'S AUTOMOBILE INDUSTRY* |
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| Authors: | HAIYAN DENG ALYSON C. MA |
| Affiliation: | 1. The Conference Board, Inc., 845 Third Avenue, New York, New York, U.S.A. e‐mail:Haiyan.Deng@conference‐board.org;2. School of Business Administration, University of San Diego, 5998 Alcalá Park, San Diego, California, U.S.A. e‐mail:maa@sandiego.edu |
| Abstract: | In this study, using market‐level data on quantities, prices' and automobile characteristics from 1995 to 2001, we conduct a market analysis of the Chinese automobile industry under imperfect competition. On the demand side, we apply a nested multinomial logit model to the national market share data in order to ascertain the demand features of China's automobile market. On the supply side, we assume Bertrand behavior to uncover the markups set by automobile manufacturers. Our empirical results suggest that some large automobile manufacturers set high markups, indicating their strong market power in China's automobile market. However, their declining markups in the late 1990's imply a reduction in market control by the major producers. |
| Keywords: | L13 L62 D43 differentiated products nested logit model Chinese automobile industry |