This study examines the effect of product market competition on the characteristics of analystsforecast. More specifically, we investigate the effect of product market competition measuredbased on HHI on forecast accuracy, forecast optimism, and forecast dispersion. Prior studies suggests that product market competition plays a role in the mechanism ofexternal corporate governance through the market discipline effect. Therefore, product marketcompetition is expected to enhance the quality of analysts forecast. Using 1,048 sample firm-years from2005 through 2010, we are able to find evidence that productmarket competition is significantly associated with analysts forecast accuracy and forecastdispersion. But, product market competition is not significantly associated with forecast optimism,Our study suggests that Competition Policy is useful to investors, analysts, and regulators inmaking their decisions through the enhancement of the characteristics of analysts forecast.