Collusion or competition? Interfirm relationships in the chinese auto industry

Wei Min HU, Junji XIAO*, Xiaolan ZHOU

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

13 Citations (Scopus)

Abstract

The Chinese passenger-vehicle industry contains a large number of manufacturers. Some of them are members of big corporate groups centered around state owned enterprises. These corporate relationships may facilitate collusion. This paper applies the non-nested hypothesis test methodology to data on passenger vehicles to identify whether price collusion exists within corporate groups or across groups. Our empirical results support the assumption of Bertrand Nash competition in the Chinese passenger-vehicle industry: We find no evidence for within or cross-group price collusion. Our policy experiments show that indigenous brands will gain market shares and profits if within-group companies merge.

Original languageEnglish
Pages (from-to)1-40
Number of pages40
JournalJournal of Industrial Economics
Volume62
Issue number1
DOIs
Publication statusPublished - Mar 2014
Externally publishedYes

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