Market structure of the construction industry in Hong Kong

Yat Hung Chiang, B. S. Tang, W. Y. Leung

Research output: Journal article publicationJournal articleAcademic researchpeer-review

61 Citations (Scopus)

Abstract

This study examines the market structure of four different sectors within the construction industry in Hong Kong. Market concentrations, expressed in terms of Herfindahl-Hershamann indices (HHIs) and number equivalents (HNEs), are calibrated for the top five contractors and compared with those of the local property industry. The study reveals the following ascending order of market concentrations: private building, public building, property development, and civil engineering. Our explanation is that technological and capital requirements have imposed a strong barrier to entry into the civil engineering sector, resulting in a concentrated market. Conversely, the lack of technological demand and supply in the private building sector has led to easy market entry and exit. Building contractors thus compete intensely on cost reduction rather than technology improvement, leading to poor construction safety and product quality. The paper concludes that the Government, being a major client of construction works and regulator of the industry, can assume a more active role in promoting the overall competitiveness of indigenous local contractors in Hong Kong.
Original languageEnglish
Pages (from-to)675-687
Number of pages13
JournalConstruction Management and Economics
Volume19
Issue number7
DOIs
Publication statusPublished - 1 Nov 2001

Keywords

  • Construction
  • Herfindahl-Hershamann indices
  • Hong Kong
  • Market structure

ASJC Scopus subject areas

  • Management Information Systems
  • Building and Construction
  • Industrial and Manufacturing Engineering

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