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The price effect and brokerage commission transformation

Author: WeiZhi From: www.yourpaper.net Posted: 2007-11-19 08:35:52 Read:
In the stage of price competition, although the securities through competition and game, finally achieved market recognition of the level of commission, but this identification is based on service identity.
Wang Cong (2002) think, the securities industry is a low concentration of completely competitive industries.According to this conclusion, in the securities brokerage business, as the product provider firms are price (Commission) recipients, impossible to price competition, from this perspective, the brokerage commission of war between the way to seize the market there is no theoretical basis.This obviously with some time ago brokers play a commission price war against reality, we need to further study; at the same time, the Commission after liberalization, securities firms should take what kind of pricing strategy, the brokerage business how to transition, it is necessary to make scientific demonstration.This paper starts from the price effect of commission, this analysis.
securities brokerage industry more in line with the monopolistic competition industry characteristics of
In different markets, the role of prices is different, therefore, to investigate the price effect of commission, we must first make clear the securities brokerage business is to belong to which kind of market.Flat Dick, Rubinfeld (2000), the theory of perfect competition depends on four basic assumptions: (1) the price takers, the manufacturer's price decision affect the market price will not; (2) homogeneous product, the consumer decision-making when only consider the price; (3) the full flow of resources, namely, entry and exit are free; (4) the complete information.Therefore, they pointed out, "in addition to agriculture, not in the sense that the market is perfectly competitive".China's current securities market also can not be fully competitive, more like a monopolistic competition market, specifically in the:
1 securities brokerage services such as product providers, although from the nationwide situation, a business department in the whole market in the ratio is not worth mentioning, they are only the price taker, but some areas especially the sales quantity is not large area, securities pricing (Commission) will produce main effect on the market.This is manifested in, when a broker to increase the Commission standards, other firms will not increase the Commission, which led to the securities of the loss of customers.However, when a broker to reduce Commission standards, will lead to other firms because of price pressure and the corresponding lower fees, otherwise it will face the loss of customers may.As of November 7, 2000, Qinghai securities launched the online securities trading commission fold preferential measures, many firms had response, triggered a securities brokerage market not a small "earthquake" can be heard without end; then, the vast majority of the Commission war the initiator of evil is small and medium-sized firms.
2 brokers to provide product is not a homogeneous product.In the case of price controls, the equilibrium process of several years, customer flow reached a relatively stable state.In this state, the customer that the broker to provide brokerage services are homogeneous, otherwise they would not be in the same price to buy different products (in the information developed case).But in fact, this is just a misunderstanding.Brokerage service is a complex factors, concept, it contains extensive factors, language, habits, geographical social relationships, including operating position, brokerage visibility, runway transaction speed, business services and service level.Different is, all of these are especially medium and small investors for investors, which belongs to the "hidden" information, the difference is their inability to smaller cost difference between sales department provide "service" (the price is the "public" information).From this perspective, comparing the two business department, even the two business department in the same company, they provide services that may not be exactly the same.
3 barriers to entry.Although in the long run, the securities company (Sales Department) to set up will be gradually liberalized, but for now, the establishment of a securities company or the examination and approval procedures cumbersome and strict, including initiated the establishment of the qualification, the scale of capital, risk control measures, from the industry the number of staff and senior management personnel qualification examination and approval complex content.To make a long story short, the securities industry entry barriers still exist.
4 incomplete information.If the preamble analysis, because of the "hidden" information, investors are difficult to obtain brokers to provide the quality of the products (such as hardware facilities), service content, complete information.
The price effect the securities and Exchange Commission monopolistic competition model
The Commission is investors buy securities brokerage services to securities prices, commodity brokerage services in this abstract labor of commodities, both demand and supply is the brokerage services.Commission refers to the price effect caused by changes in the volume of commission change rate.In order to analyze this problem, this paper introduces the supply and demand curves are analyzed.
From the supply perspective, according to the law of supply, prices leads to a decrease in supply.But the result is intuitionistic observation of supply (i.e. firms provide brokerage services) and not with the commodity price changes (Commission).Why?In the price regulation (fixed commission system) state, price in the equilibrium position, so the existence of excess supply.Even if is the decline in prices, this surplus is reduced, but not to the equilibrium position, the excess is always there.Therefore, a change in supply is not out of the.At the same time, also has the price elasticity of supply.For each business department, the marginal cost of supply is very low, the variable cost occupy the on-site customer and site caused the device (in fact, short-term inside these also cannot change the sunk cost), marginal cost of telephone, online trading is very low.Therefore, the elasticity of supply brokerage service is very low.Because of rising marginal cost curve is extremely slow (supply curve short-run marginal cost curve is the enterprise), so the price changes for supply is almost not affected.
From the perspective of demand, according to the law of demand, prices will rise in demand, so that investors will increase the demand for the purchase of brokerage services, but the increase extent how?This depends on the relationship between the securities transaction costs, the stock market price and volume.Dongbei University of Finance and Economics and the China securities joint research group (2002) by the empirical research that: (1) the stamp tax increase will lead to market volatility increased significantly, while the cut stamp duty to cause market volatility reducing effect is not obvious; (2) Commission adjustment of market volatility interest has no effect, there are three reasons a: investors are rising in the transaction cost is more sensitive and decreased in the transaction cost does not care, is the two in China's securities market "share" phenomenon has been more common, three is the Commission adjustment exist "announced" effect.
Wang Juntao (2002) using the VAR model to Granger test, the results show that price change driven by trading volume, trading volume changes and there is no effective drives the price, the stock market is still excessive speculation, the market there are too many "noise" transactions.
The economic effect and the price alliance brokerage drop domestic the vitality of
, the brokerage to drop domestic motivation
If so, why firms repeatedly by reducing the commission means to expand market share?After the analysis, we think, the brokerage drop domestic motivations are mainly in the following aspects:
1 commission price as the securities business department can be transmitted to the customer "is not" the "public" information, easier for investors to understand and accept, especially for new customers and old customers in the short-term visitors, this effect is more serious.
The 2 pursuit of advertising effect.Is the new "* * *", small firms, brokerage firms, the purpose is to obtain a leading effect through to lead, to break the "quiet" pattern of the market, in order to achieve the effect of advertising to attract investors.
3 cost control more successful firms, such as online transactions more successful Huatai Securities, Yinzhengtong business more successful Guoxin Securities, they want to point blank to occupy the market rapidly through advanced technology, low rate "".
two, irrational drop domestic effects on the firms
Then, the broker can achieve its intended purpose?We believe that, unless the cost reduction strategy based on low commission, any other irrational drop domestic behavior not only cannot expand their market share, may also fall into the vicious competition from price competition, will endanger the whole securities brokerage business survival and development.
1 low commission is limited to attract customers.For our customers, even if other conditions are the same, to change the market place, also want to consider the cost to households.Customer transfer cost (include transportation, custody fee and time cost) is a doorsill hinder customer flow, once the Commission declined gains could not make the customer transfer cost, rational customers do not select switch.
2 of the firms, management should aim to maximize profits rather than volume maximization.If the Commission did not increase proportionally decreased volume, then lower commission
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