Research On The Loss Of Monopoly

In the course of the economic activities, the discussion on the issue of monopoly has been a prevalent topic. In our daily life, power, railway, telecommunications and water enterprises are all monopolistic industries. The monopoly enterprises usually obtain the high profits because their market monopoly position allows them to provide low-quality products at high price, which cause customer’s loss. In order to reduce the loss of monopoly, many scholars suggest that the government should implement the regulation of the monopoly enterprises, which can realize the purpose of effective allocating resources and improving economic efficiency. However, whether in developed countries or in developing countries, the result of regulation has been failed which have been reduced the economic efficiency and cultured rent-seeking corruption behavior which becomes the society’s malignant tumor. This shows that the previous research on the loss of monopoly does not provide effective help for the government to solve the monopoly problem. Therefore, mastering the essence of monopoly and finding the mainly cause of the loss of monopoly are the key factors to solve the problem of monopoly, which need to break through the shackles of the study of monopoly losses, find the new theoretical system to re-examine the issue of monopoly. Based on that, we can provide reasonable policy recommendations and theoretical support for working out the monopoly problem. The research content of the thesis is as follows:Firstly, based on a detailed review of the previous studies on the loss of monopoly, the paper analyzes the shortcomings of previous studies. In the theoretical study of the loss of monopoly, Harberger Triangles, X-inefficiency and Tullock rectangle are the three representative theories. Among them, Harberger Triangle is the theoretical basis of other follow-up studies. Therefore, the paper takes it as an major example to analyze the defects of traditional monopoly loss theory which have been verified to have theoretical logic errors.Secondly, the paper used market process theory to analyze the monopoly problem. In the perspective of market process theory, monopoly has the properties of naturalness and transiency. Naturalness of monopoly is decided in a particular industry by its specific endogenous economic and technological features. Natural monopoly is the result of market competition process in a certain period of time which is accepted by society, if there are no artificial barriers set up by government. In addition, Monopoly enterprises are usually not stable. As long as the market competition is open and there is no entry barriers set by the government, with the subsequent potential competitors continuing to come into, the original monopoly will be broken by other competitors. Generally speaking, unless with the government’s intervention or the help of other coercion power, monopoly is not stable and continuous. Any monopoly power and monopoly profits are only temporary, since the dynamic characteristics of open competition process tends to eliminate monopoly.Thirdly, the causes of monopoly are analyzed. According to the theory of market process, profits of enterprise should not be understood as a waste of social resources, but as a dynamic incentive to promote economic efficiency technological innovation. By profit incentive, entrepreneurs are trying to find the potential opportunities. The rivalrous competitive process ultimately realizes the dynamic efficiency, if there is no political boundary. It has become a source of sustained economic growth that entrepreneurs constantly find new knowledge and make dynamic innovations. However, under the framework of neoclassical economics, the research on the loss of monopoly will inevitably lead to the government’s regulation on monopoly. Originally the government regulation should be a tool that maintaining the order of competition in the market, but in fact it has become the power that limiting competition and interference of competitive process. The essence of the monopoly problem is that the government regulation caused losses to the competition process and entrepreneurial spirit of agonistic competition, which has been realized. The government regulation inhibits the innovation activities of the entrepreneurs, which has a strong anti-innovation tendency and characteristics, which can not be accurately estimated. We can never imagine, if there are no government barriers to set up, the real world may be what looks like. Therefore, in the case of the existence of government regulation, monopoly can hinder the process of market competition, block the process of market discovery, suppress innovation and restrict people’s choice, which is the real loss of monopoly.Fourthly, the conclusions which got in the above contents are verified by the model analysis and case study. On the one hand, the paper construct economic model to further analyze the rationality of the conclusion using market process theory, probability theory, econometrics and other related knowledge, which are based on three dimensions including the knowledge, entrepreneurial action, the degree of competition. On the other hand, the paper has analyzed the specific circumstances of china to verify the conclusions obtained. Through the analysis of the actual data, it is found that the innovation efficiency of the state-owned enterprises is obvious lower than the private enterprise.Finally, according to the theoretical analysis of the conclusion, the paper has put forward relevant policy suggestions, which hopes can turn the government’s attitude to monopoly and make useful measures.