Research Of Monopoly Market Competition Equilibrium Under Complete Information

Before the 1970s,the western developed countries implement government regulation or state ownership on traditionally natural monopoly industries like aviation, telecommunication, electric power, railway, and postal, trying to solve the trouble of "Marshall conflict", which means their purpose is enjoying the benefit of scale economy, while avoiding or reducing the drawbacks of monopoly. From the practice of China's economic transformation of 30 years, the reform of monopoly industries are slowly to progress. In fact, the monopoly of these basic industries such as railroad, electric power, civil aviation, and communication, which related to people's livelihood, is not only unfavorable to the national economy development, but also bring some negative effects to this industry. Where is the way to break monopoly for these industries? Which market competition pattern will be presented after the reform?According to the above problems, this paper analyzed the market behavior from complete monopoly to oligarchic monopoly by using game theory and industrial economics theory, thus obtained different Competitve equilibrium under different situation. The equilibrium results can not only provides some reference for government to make macroeconomic policy, but also provides practical reference for manufacturers. This whole is divided into four parts:The first part focuses on market behavior of manufacturers when its market structure is completely monopoly, which means there is only one monopoly firm in the market. Firstly, the author analyzed the market structure under completely monopoly, and studied the characteristics of completely monopoly market, short-term equilibrium, long-term equilibrium, market performance and social welfare. And then the author studied it on single products and multiple products condition from the perspective of monopoly firms. Besides, in single products research, the author further distinguished market completely coverage and market segment coverage, and in the multiple products research distinguished the author distinguished weather take the consumer spending parameter into consideration. At last, the author studied the market price discrimination of completely monopoly manufacturers.The second part mainly introduces market competition of two monopoly firms, and discussed Competitive market under cost asymmetry and product differentiation. The results show that under cost asymmetry, although the leaders have the first-mover advantage of "inherent", the followers can also reduce the constraints of leaders to attain their own maximum by its "acquired" pre-emptive. Furthermore, the product differentiation can offset the first-mover advantage of the leaders, especially when the product differentiation up to a certain extent, the followers' output and profit will exceed the leaders. Thus, it can be drawn that the final equilibrium of market competition is interacted by first-mover output decision-making and the late-mover differentiation. Then, expanding the product differentiation model, adopting vertical differentiation to discuss, namely, when product quality is measured by product differentiation, the conclusion is the marginal cost is lower, the product quality is better, the firms who make a first move strategy would win highest equilibrium output and profits.The third part mainly introduced market competition of three monopoly firms. It focuses on two questions:first questions are the potential entrant access to market and incumbent firms want to prevent its entry at the same time. The author researched the Game of entry and prevent when market exist two monopoly firms and one potential entrant. In research, the author established two models to distinguish whether two incumbent firms make decision at the same time. The results show that each manufacturer will consider the impact of access for both profits. Leading manufacturers will not exaggerate the negative influence on their own. So it won't produce "free-rider" phenomenon, and also won't appear to the phenomenon that only one manufacturer to stop into potential entrant.Second, the author studied market competition of three monopoly firms. In three monopolistic competitions, the author discussed its competition under cost asymmetry and product differentiation. For each case, it can be divided into many situations by different decision order and differentiated decision-making. This chapter established S-S model, S-C model and S-M model, and compared all kinds of competitive equilibrium through an example. The results show that the final equilibrium results were impacted by manufacturers' decision order and the degree of differentiation under different situation. The equilibrium results of manufacturers are interacted by output decision-making order in first stage and differentiation degree in second stage. Then, the three firms have emerged the shift. The market equilibrium shows different status because these three firms show different state of market share in different products, different geographical area, different brand, and different time. Therefore, in three oligopoly market, the leaders does not lead forever, the followers does not necessarily follow at all time.The fourth part is positive. As the case of Chinese telecommunication industry, quoted the relevant data in 1999-2007, the author verified the relevant conclusions of chapter four through the competition between China mobile and China Unicom before the reform mobile communications market in 2008, and predicted that the competition equilibrium among three full-service operators in 3G after reform,quoted the relevant data in 2008-2009, by the competition analysis of three monopoly firms in chapter 5.