The Research On Price Competition Of China’s Passenger Cars Market

As China’s pillar industry of national economy, the automobile industry has made outstanding contributions for economic development. As the most important part of automobile industry, the passenger cars also experienced a period of rapid development and gradually spread to the common people’s daily life and profoundly changed the way the common people travel. But the fierce price competition of passenger cars market is still an outstanding problem. Consumers’demand decreases because of the financial crisis in2008. Although the government’s rescue policies which were brought out in2009caused the passenger cars market prosperity, the market downturn in2011proved that the growth of passenger cars market has slowed down obviously. Under this condition, some companies took the price competition strategy in order to keep market share or fight for more market share. But this kind of price competition didn’t improve the whole industry concentration, decreased company profit and overall industry benefits instead, seriously influenced and threatened the long-term development of passenger cars industry. So this paper mainly discusses and tries to resolve the following four questions:first, why does the price competition exist in passenger cars industry; second, what are the characteristics of the price competition; third, what factors will influence the price competition; fourth, how to improve the efficiency of the price competition and industrial organization performance.This paper chooses the China’s passenger cars market as the research object. At first, this paper analyses the price competition using the theories of western economics and game theory from theoretical way and concludes the characteristics and reasons of the price competition. Then, this paper constructs a empirical analysis model to analyzing what factors will have influence on price competition and draws relevant conclusion. Finally, this paper makes conclusions and puts forward the corresponding price competition strategy and industry policy suggestions based on the theoretical and empirical analysis.