Research On Inter-firm Rivalry Of Chinese Automo Manufacturers In The Perspective Of Network Game

Multi-market contact and strategy interaction are two prominent characteristics of competition between modern firms. In an industry with obvious multi-market contact, the competition between firms can be viewed as a process of inter-firm rivalry on the firm network linked by market contact. Hence it is of necessity to study the competition between firms from the perspective of firm network and of strategy interaction. The present paper tries to offer a meticulous and profound theoretical analysis on the inter-firm rivalry in China automobile industry by applying the network game theory and incorporating complex network analysis method.The paper begins with the construction of a grneral network game analysis framework and some specific models of inter-firm rivalry: (1) constructing a general infinite repeated network game model for inter-firm rivalry; (2) defining from multiple perspectives the strategies of firms in the game, including trigger strategy (such as tit-for-tat and grim strategy), inconsistent and consistent strategy, and random punishment trigger strategy from the perspective of Awareness-Motivation-Capability; (3) constructing three infinite repeated network game model with specifically-defined rivalry action for the inter-firm rivalry based on differentiated product Cournot model, namely: price war network game model, brand competition network game model and capacity expansion competition network game model.Then, the paper carry out a theoretical analysis of inter-firm rivalry between China automobile firms based on the price war, brand competition and capacity expansion competition network game model. Initially, 7 firm-product weighted bipartite networks are constructed, in which the edge weight are the corresponding annual output from 2000 to 2006, respectively. Thereafter, simulation models of inter-firm rivalry according to the bipartite networks above are designed, including estimatation of product market size, production cost of firms and setting of simulation parameter, control variables, initial state, simulation proccess and output variables. The analysis of simulation results show that: (1) the consistent strategies can effectively inhibit the occurrence of brand competition but will enhance the diffusion of price war and of brand competition; whereas they have no significant impact on the occurrence of price war or on the occurrence and diffusion of capacity expansion competition; (2) the enhancement of enterprises'expectation for counterattack can effectively inhibit the occurrence of price war and capacity expansion competition, but has no significant impact on the occurrence of brand competition or the diffusion of all categories of inter-firm rivalry; (3) firm-product bipartite network exerts a tremendous impact on brand competition, whereas the impact is moderate on price war and insignificant on capacity expansion competition.Finally, The paper anylyzes the relationship between the topology structure of firm-product bipartite networks and the price war and brand competition of China automobile firms, while reveals the following discoveries: (1) the tendency of firms in launching rivalry action in price wars is in negative correlation with its average shortest path and clustering coefficient but not significantly related to its node weight. In contrast, the tendency of firms to initiate rivalry action in brand competition is in positive correlation with its node weight and clustering coefficient but in negative correlation with its average shortest path. (2) From 2000 to 2006, the average shortest path of firm-product bipartite network is increasingly smaller and the clustering coefficient is getting larger whereas the power exponent of node weight distribution is getting smaller. Such variation of the typology indexes offers a reasonable explanation for the evolutionary features of China automobile firms in real-life inter-firm rivalry. (3) Firm-product bipartite networks in the Chinese automobile industry has distinct community structure whereas the inter-firm rivalry of enterprises mainly takes place inside network community, but also spreads among closely interconnected communities.The innovation of the present paper is chiefly embodied in the following aspects: (1) it applies the network game theory to study the inter-firm rivalry to put forward a general model and analysis framework of infinite repeated network game based on firm-product bipartite network, which offers a new perspective and new idea for the research of inter-firm rivalry. (2) It introduces Cournot competition model of production differentiation to construct a network game model of price war, brand competition and capacity expansion competition, thus offering an effective tool of theoretical analysis on inter-firm rivalry. (3) it discusses the impact of network typology on inter-firm rivalry by combining complex network analysis and network game simulation; this has been a successful attempt which will in turn provides methodological reference for similar research. (4) it reveals the features and evolutionary features of inter-firm rivalry of China automobile firms in price war, brand competition and capacity expansion competition, hence facilitating our understanding of the inter-firm rivalry between China automobile firms.