Research On The Effective Competition Of Chinese Railway Industry

As the national infrastructure and the popular traffic tool, railway is the backbone in the integrated transportation system. The mode and direction of the railway industry reform is being an important issue for scholars in home and abroad research in transport studies. Throughout the experience from the European and American developed countries, they all try to break traditional monopoly by the introduction of effective competition if railway industry wants to get away from the circle of long-term loss and low efficiency. After the separation reform of government functions from enterprise management, the railway industry began to march towards to the market and adapt to it. How to introduce effective competition to resolve the problem of railway development becomes an important research topic with theoretical and practical significance.The economics of scale and competition dynamics are two dimensions of effective competition, from which prospects we could find out the fundamental reason of introducing effective competition to railway industry. The railway industry has obvious economies of scale. Therefore, in the process of introducing competition, we should control the enterprise quantity in order to realize both the economies of scale and competition dynamics to achieve the effective competition. The process of introducing competition is actually the process of introducing effective competition.This thesis selects the railway transportation industry as the research object. From the prospects of economies of scale and competition dynamics, the problem of introducing effective competition to railway industry was studied. Then the explanatory framework was built to deep analyze the affecting factors of economies of scale and competitive dynamics. The thesis finds the leading factor of low efficiency of railway industry in China. The relationship among government, market and enterprise is cleared. In general, the main contents and conclusions were consisted of following aspects.Firstly, through the review of previous studies and resorting the literatures, we found that there is space about using the effective competition theory to solve monopoly problem in railway industry. Previous studies mainly focus on one country and most on telecommunications, utility industry, water conservancy and post industry. There has not a large range of application to railway industry. This paper further found that it is helpful to start from the influence factors of effective competition to study the monopoly problem in network-oriented infrastructure industry like railway in-depth under the existing analytical framework.Secondly, this paper built a theoretical framework based on two perspectives about the introduction of effective competition. We reconsidered the relation among monopoly, competition and effective competition. We do not deny monopoly but affirm the important role of effective competition to monopoly network basic industries like railway industry. Then we point out the logical relationship between different elements and raise four key hypotheses providing the research foundation for following chapters. This paper also presents that the government control, high entry and exit barrier and inflexible price mechanism are leading factors causing the low efficiency.Thirdly, we analyzed the competition dynamics in our railway industry with two prospective of price mechanism and industry enter and exit barriers to prove the competition dynamics of our railway industry is weak. The stiff and under controlled price mechanism limit the vitality of enterprises to participate in competition. When faced with the fluctuating market demand and flexible competitive strategy from competitors, it is difficult to railway company to adjust its strategy quickly which could lead them to lose the opportunity of market development. And with the existence of industry enter and exit barriers, it hinders the participation of potential competitors and brings the negative incentives. In this part, we also discussed the effects of price controls and the cause of price regulation failure.Fourthly, this paper measured the efficiency of economies of scale and operation of the railway industry. We measured the efficiency loss, reasons for the loss and extent of damage from 18 railways and the railway transportation industry level through the three stage DEA model. The model results show that there a big proportion of the loss of efficiency although there exists economics of scale in the railway industry. And the main cause is due to low efficiency of management meaning the necessity of structure adjustment of railway market. From the view of scale reward, a trend of diminishing returns in most railway bureaus during the previous five years although most of them are in increasing state meaning the factor inputs are saturated. It is crucial to increase the factor inputs to those bureaus with increasing scale reward to improve the input-output efficiency. In addition, we also explored reasons of railway low efficiency.Fifthly, through analyzing the mode and problems of effective competition introduction from typical railway countries and organizations including EU, UK and America, this paper indicates that the separation of government and enterprise, railway network opening, the separation between operation and network and introducing parallel lines competition are the most basic path to introduce effective competition. Then the different roles and function of government, market and enterprise are analyzed too.In the end, combining with the actual development and reform stage of our railway transportation industry and the experience from America and European countries, the thesis presents several advices such as the competition should be introduced into the operation section, the enterprise quantity should be moderate to achieve economies of scale, the control should be deregulated and the yardstick competition should be valued and so on.In this paper, the innovation points about the research of effective competition in railway industry could be summed up as follows:Firstly, the research focuses on the effective competition issue of our railway industry from both dynamics and scale economics view including price mechanism, industry enter and exit barriers, government control, management efficiency, operational efficiency and scale reward which is more comprehensive and systematically. Secondly, we built a basic interpretation framework considering the government, enterprises, market and laws to explain the route of competition introducing, which provides some instructions for competition introduction and building security mechanism. Thirdly, we measured the efficiency loss in the bureaus and industry level especially the management and scale efficiency and concluded the extent of inefficiency and reasons of it proving the empirical basis for future reform. Finally, we summarized the route of competition introduction from abroad experience in a more comprehensive way verifying the applicability of our interpretation frame and providing the theoretical and practical reference to the route and mechanism design.