ABSTRACT
This chapter proposes to formulate a model of market competition and strategies based on the Austrian school of economics. It has applied the Austrian theory of market competition to interpret the supermarket war in Hong Kong. The first supermarket, Wellcome, was founded by three Chinese businessmen in Central in 1945. The number of supermarkets increased to 200 stores by 1980 and to over 500 stores by 1990. The confrontation between two supermarket giants in Hong Kong, namely ParknShop and Wellcome, and a new entrant, namely the 759 Store, testifies to the Austrian theory of market competition. The chapter further focuses on the market process in which groceries and retail stores are fully aware of their rivals. In the dynamic competitive process, entrepreneurs or shop owners are active, creative, and strategic. This chapter concludes that in a free open market without government entry restriction, supermarkets or grocery stores cannot abuse market power by charging unreasonable high prices for their products.
