A discriminant model for measuring competition intensity of construction market

Abstract

Purpose – “Competition intensity” is a factor in addressing competitiveness. The understanding on competition intensity is prerequisite to the formulation of industrial competition policies as well as firms’ competition strategies. In the construction context, whereas competition intensity can be measured using a number of traditional approaches (e.g. competitor number, concentration), the measurement is often criticized for poor efficiency. The purpose of this paper is to propose a new model for measuring competition intensity in light of the theory of discriminant analysis. Design/methodology/approach – The proposed model is composed of predictor variables concerned with market operation as well as criterion variables that classify markets into a few predefined groups based on the values of competition intensity. Empirical data of China's local construction markets were collected to verify the proposed model. Findings – The research findings indicate that the model can offset the drawbacks of traditional measures in the construction market. Research limitations/implications – It is recommended using the proposed model to predict the competition trend of construction market especially when data for the traditional approaches are poor or not readily available. Originality/value – The proposed model is a development of the literature in examining competition intensity.