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Collusion or Competition? Interfirm Relationships in the Chinese Auto Industry

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  • Wei-Min Hu
  • Junji Xiao
  • Xiaolan Zhou

Abstract

type="main"> 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.

Suggested Citation

  • Wei-Min Hu & Junji Xiao & Xiaolan Zhou, 2014. "Collusion or Competition? Interfirm Relationships in the Chinese Auto Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 62(1), pages 1-40, March.
  • Handle: RePEc:bla:jindec:v:62:y:2014:i:1:p:1-40
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    Cited by:

    1. Xiao, Junji & Ju, Heng, 2016. "The determinants of dealership structure: Empirical analysis of the Chinese auto market," Journal of Comparative Economics, Elsevier, vol. 44(4), pages 961-981.
    2. Akçomak, Ibrahim Semih & Bürken, Serkan, 2019. "The middle-technology trap: The case of the automotive industry in Turkey," MERIT Working Papers 006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Zijun Luo & Yonghong Zhou, 2016. "Gainers and Losers of Political Instability: Evidence from the Anti-Japanese Demonstration in China," Working Papers 1608, Sam Houston State University, Department of Economics and International Business.
    4. repec:eee:jeeman:v:93:y:2019:i:c:p:20-43 is not listed on IDEAS
    5. repec:eee:transa:v:124:y:2019:i:c:p:203-216 is not listed on IDEAS
    6. Sun, Qi & Xu, Lin & Yin, Hua, 2016. "Energy pricing reform and energy efficiency in China: Evidence from the automobile market," Resource and Energy Economics, Elsevier, vol. 44(C), pages 39-51.
    7. Junpei Komiyama & Hajime Shimao, 2018. "Cross Validation Based Model Selection via Generalized Method of Moments," Papers 1807.06993, arXiv.org.
    8. repec:eee:transa:v:120:y:2019:i:c:p:261-276 is not listed on IDEAS

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