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The Analysis of Price Strategy in Domestic Oil marketYang, Sin-cheng 27 June 2006 (has links)
After experienced two energy crises, the shock of oil price volatility has become more and more critical economically and strategically. In recent years, the phenomena of high demand, high oil production, and high price of oil have resulted in significant impact on economy and people¡¦s welfare in Taiwan. Two major suppliers are Chinese Petroleum Corporation (CPC) and Formosa Petrochemical Corporation (FPC) in Taiwan. Their responsive strategy become more challenging. To discuss this subject deeply, the event study is applied to understand how the differential price strategy influences their operation. Besides, the non-parametric method is also used to analyze the behavior of the competitive price.
Empirical results indicate that after taking the measure of remaining price constant, total sales volume of CPC doesn¡¦t increase. In the other hand, total demand of FPC decreases as expected after increasing price. The results also show that CPC¡¦s operation becomes poorer, and FPC¡¦s operation becomes better. The reason behind FPC¡¦s success may be by expanding foreign market timely. However, the statement needs more data to prove it. Finally, two chosen strategic behaviors can¡¦t explain the price setting of unleaded gasoline, but Bertrand¡¦s statement may explain the phenomenon of price-cutting in 98 unleaded gasoline.
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