| The paper reviews the vertical changes in the market structure of auto industry in China over the past seventy years.What’s more,it makes a comparison with the automobile powers such as the United States and Japan horizontally.The paper finds that auto industry has structural problems in China such as low market concentration and insignificant economies of scale.Judging from the experience of Europe,the United States,Japan,South Korea and other countries,it is imperative to merge and reorganize in the auto industry.The auto industry has a huge impact on the national economy and its industrial chain is very long.That’s why it is easy to generate monopoly in different links.The merger of automobile manufacturers has been key area of antitrust investigations.Based on these considerations,the paper collected monthly price data,product feature data,and monthly sales data of some models in the passenger car market from September 2017 to September 2019.According to the method of M&A simulation proposed by Nevo(2000b),the random coefficient discrete choice(BLP)model is used on the demand side to estimate the demand parameters of the automobile market and the price elasticity of demand for the product.As for the supply side,it is assumed that in a differentiated product market.All manufacturers conduct Bertrand competition in order to maximize their own interests.And they estimate the marginal cost based on the estimation results of the BLP model.Empirically simulated changes in the structure of the automobile market after the merger of FAW Group and Changan Automobile.It measured changes in consumer welfare after the merger.First,the data shows the similarity of models in the passenger car market in China relatively high.Second,the BLP model can get a more realistic price elasticity of demand,and accurately portray the fact that "the more similar the product features,the higher the cross-price elasticity".Third,the prices of all products of the two automakers after the merger will increase,and their market share will be to a certain extent the prices of all products of the after the merger occurs.The decline in the product,but the profit of the product rise.The overall profit level of the manufacturers in the market will increase to varying degrees,but the loss of consumer welfare is huge.More than a year after mergering,the loss of consumer welfare in the market is greater than the profit added value of the manufacturer,resulting in loss of total social welfare. |
