Excessive Competition In China's Audit Market Research

Where is a market, there are competitions. The social wealth could be optimized in deploying by the modest competition. As we know, everything in the whole world has its limitation. Excessive competition affects the distribution of resources, which would confuse our market's order and operation. Audit market has some functions in public inspection. Everybody in the society might exchange signals on how to collocate the valuable economic resources in a health audit market. So once there is an excessive price competition regardless of audit quality in the audit market, the quality of audit product will decline significantly. If the said competition is kept longer and further, correct conclusions can not be drawn by the economic body and the whole audit market will shrink seriously. It is a practical and deep significance that we work hard to search the essential and reasons of excessive competition and bring forward some advises on the transit from excessive competition to workable competition.The article has three parts. In the first chapter some historical works on excessive competition are reviewed, and then the basic definition of excessive competition is clarified. Excessive competition is a market action taken by some participants, whichshould have maximized their given benefit but imposed a long-time negative impact on their own industry. By this meaning we conclude the concept of excessive competition in audit market. According to the Theory of Structure-Conduct-Profit in Organization Behavior, the research on workable competition of Professor Edwards,Mason and Stephen'Sosnick, the character of audit market as well, three specific standards are concluded. The second chapter is emphasis part which research the competition state of China audit market and reasons. According to the standard of excessive competition, the contrast of market concentration between China and United States, the price and profit in China audit market, we conclude that the competition in China audit market is excessive compete. What kind of competition in audit market is workable? What characteristics should workable competition possess? How to define the workable competition in audit market? How to realize the transition from excessive competition to workable competition? These questions were answered in the third chapter. At first, we reviewed the concept of workable competition in economics, then we infer it to auditmarket. According to the theory we set up the basic frame of workable competition in audit market.According to the characteristics and operation method of audit market, we conclude the concepts of excessive competition in audit market and workable competition in audit market. We sum up the standards of excessive competition in audit market and workable competition in audit market according to the theory of industrial organization. We make use of Betrand model to understand the excessive competition in audits market, analysis the probability of excessive competition in audit market and find out the reasons of excessive competition in audit market. At last, we put forward some propositions of transition from excessive competition in audit market to workable competition in audit market according to the reasons of excessive competition in audit market and the standard of structure - conduct - profit in audit market...