Measurement And Analysis Of Market Forces In China's Motorcycle Exports

Market power is the ability of a firm to alter the market price of a good or service. A firm with market power can raise prices without losing all customers to competitors.As an important function of firms, market power is the main reflect of market status. Unlike the existing research on domestic monopoly power and the loss of well-being, we applied Goldberg & Knetter model after properly amended to measure the market power of China's motorcycle in the international market. We measured the market power of Chinese motorcycle in five main international markets, i.e. USA, Nigeria, India, Germany, Argentina, and found that market power is very small in all these markets. Then we analyzed the reasons for the lack of market power and brought up corresponding countermeasures and suggestions. In empirical measure, we take Lerner index and the residual demand Elasticity as the indicators of market power. According to Goldberg & Knetter model, we decomposed market power into quantity and price that our country exported to the target country, the demand change of target country which is calculated through real GDP and CPI of the target country, cost change (which include fluctuation of exchange rate between our country and the target country, labor cost and material cost ) of competitors.Then we used stepwise regression and partial least square regression for processing data, and compared the results of the two different methods. Through the empirical analysis, we found that at the industry level, market power is not obvious in all the five major export markets. Based on the above analysis, we bring out corresponding proposals, such as enhancing concentration ratio of industry through restructuring; enhance technological innovation capability, increase the technological content and value-added of products, the implementation of product differentiation strategies and brand strategies, so as to gradually acquire high market power.