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MARKET STRUCTURE AND PRICING STRATEGY OF CHINA'S AUTOMOBILE INDUSTRY *
Author(s) -
DENG HAIYAN,
MA ALYSON C.
Publication year - 2010
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/j.1467-6451.2010.00434.x
Subject(s) - multinomial logistic regression , market share analysis , market share , market power , china , order (exchange) , automotive industry , industrial organization , imperfect competition , competition (biology) , economics , supply and demand , market structure , business , microeconomics , market microstructure , marketing , engineering , finance , ecology , machine learning , computer science , political science , law , biology , monopoly , aerospace engineering
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.