Shen, L and Cheung, S O (2018) How forming joint ventures may affect market concentration in construction industry? International Journal of Construction Management, 18(2), pp. 151-162. ISSN 1562-3599
Abstract
The construction activities in Hong Kong are at unprecedented high level since the launching of an ambitious infrastructural development programme that involves the construction of ten mega projects (TMP hereafter). Since the commencement of the programme in 2008, the tenders returned for these projects have exceeded the respective project budgets significantly and far beyond the inflation factor. Major concerns have, therefore, been raised over if there is an issue of insufficient competition. Concentrated market is considered less competitive and can be futile ground for bid manipulation. This study employs the contract values of the TMP to calculate concentration measures including four-firm concentration ratios and Herfindahl–Hirschman Index. Furthermore, contractors are categorized into active and occasional group. The effects of forming joint ventures (JVs hereafter) on these two groups are examined. The findings are as follows. For active contractors, due to the network among them, forming JVs lowers market concentration. For occasional contractors, forming JVs increases market concentration. It is suggested that for projects of lower technical complexity and value, project segmentation would enhance market competition.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | construction joint ventures; level of competition; market concentration |
| Index terms: | construction industry, joint venture, Hong Kong, construction activity, competition, inflation, complexity, programme |
| Subjects: | business, economic analysis, construction operations, Geography, project controls, market analysis, systems engineering, industry analysis |
| Topics: | Geographical Context, Research Practice, Engineering Principles, Business Strategy, Site Management, Time Control |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here