Government Regulation, Government Functions And The Efficiency Of The Supply Of Public Goods

The characteristics and the efficiency criterion request the way of joint supply in the provision of public goods. In the modern society the governmental provision is one of the most important ways of public goods supply, so the provision of public goods is closely related to the government, governmental function, and the efficiency of governmental activities. The modern theory of regulation is based on an almost ideal market economy, and the study of the government in the theory of regulation is on the premise of the competitive market background. The discussion of the governmental activities and regulation in China must be on the basis of the reality of China, and the possible valuable conclusion could only be drawn by the combination of the definition of governmental function, governmental activities, and governmental regulation. The proper theoretical definition of scope of public goods and the governmental function, the analysis of the provision of public goods and the mode of regulation in accordance with the reality in China is essential to the break of monopoly in some area of public goods provision such as urban public utilities, introduction of incentive and competitive mechanism, improvement of efficiency of public goods supply and resource allocation, and the fulfillment of customer demand, which is also the contribution and purposes of this dissertation.The efficiency of public goods supply is closely related to the governmental regulation. Regulation is the intervention of the government to the microeconomic agency, so the study of regulation is in the scope of the problem of public goods supply. The modern regulation activities appeared as the intervention of American government to railway industry in 1887. The first question the theory of regulation must answer is why regulation is needed and why the government should intervene the market mechanism. The original reason of regulation is to correct the market failure, improve the economic efficiency, and to maintain the social interest. While as the theory and reality of regulation presents, there's no reason to believe that the purpose of regulation issued by government is to maintain the social public interests. Any microeconomicagency is rational economic man and will pursue the utility maximization, so is government. The government failure, the substitutive competition between industries, the growth of cost of regulation, and the change in technology relent the reason of regulation altogether. The trend of de-regulation appears in 1980s, while regulation is still necessary due to the imperfect competitive market background in reality. The efficiency of regulation differs with modes of regulation. The development of regulatory mode comes through the price regulation, incentive regulation and negotiated regulation. The design and choice of proper regulatory mode could be favorable to the reduction of efficiency loss of rent-seeking and natural monopoly, and the cost of regulation. The regulation in urban public utilities should consider both the efficiency and equity. The original purpose of regulation could only be reached by the unity of firm interest and public interest.The governmental function is directly connected with the public goods supply. In the framework of public goods study, the only function of government is to provide the public goods to the whole member, including both the tangible material and those intangible such as institution. The type, model and efficiency of public goods supply are quite different in plan and market economy. In plan economy, the government is omnipotent and the governmental function is infinite. All the public goods and some private goods are directly provided by government. Obviously, such kind of governmental function would cause the low efficiency of resource allocation. In market economy, the provision efficiency would be improved by multi supply agency, multi investment resource, and competitive incentive mechanism. In transition of China's economic system, the old mechanism of plan economy still exist, an...