Abstract：Price determinants and price competition are important issues in firm theory. Due to difficulties in accessing and measuring the price competition tendency of a company, there is still little empirical evidence in related research field. This study tries to use public listed firms’ data to conduct exploratory research. Taking China’s A-share listed companies from 1999 to 2010 as research sample, this paper firstly studies the relationship between firms’ relative market power and price competition tendency. Based on this, this paper further studies whether industry structure affect this relationship. Empirical results suggest: the higher the market share of a company is, the higher the degree of price competition tendency is. However, the industry structure of a company will moderate this effect. As the industry concentration increases, the price competition tendency of a company with greater market power will decrease. The tests based on groups according to industry structure also support this finding. Our conclusions not only fill the gap in micro empirical evidence of price competition to some extent, but also enrich the academic literature on relationship between industry organization and micro firm’s behavior.
Keywords: Market Power, Industry Structure, Price Competition, Sales Manipulation
source:Finance & Trade Economics ,No2,2014