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Product market competition and cost stickiness: Evidence from China

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  • Jia Li
  • Zhengying Luo

Abstract

Product market competition affects management's resource allocation and cost adjustment decisions. It also affects cost stickiness. This paper looks at the impact of product market competition on cost stickiness in different economic environments. Using quasi natural experiment and the samples in Chinese capital market, this paper analyzes and tests these questions. We conclude that (1) in emerging markets, product market competition reduces cost stickiness. (2) For enterprises with differentiation strategy, the impact of product market competition on cost stickiness is not significantly weakened. (3) For enterprises with state‐owned property rights, the impact of product market competition on cost stickiness is significantly weakened. In addition, financial strength and industry competitive position also weak the impact of product market competition on cost stickiness.

Suggested Citation

  • Jia Li & Zhengying Luo, 2021. "Product market competition and cost stickiness: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(7), pages 1808-1821, October.
    • Handle: RePEc:wly:mgtdec:v:42:y:2021:i:7:p:1808-1821
    DOI: 10.1002/mde.3346
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    4. Xiaowei Ma & Wanwan Ma & Xin Zhao & Xiaoxiao Zhou & Kamel Si Mohammed, 2024. "Increasing Burdens or Reducing Costs: Influence of Corporate Social Responsibility on Cost Stickiness," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 2136-2155, March.
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    6. Jia Li & Zhoutianyang Sun, 2023. "Cost stickiness, earnings forecast accuracy, and the informativeness of stock prices about future earnings: evidence from China," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-16, December.

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