Collusion Generates And Checks And Balances: Theoretical Analysis And Evidence From East Asia

Collusion is a kind of old economic and political action. Early theories of collusion belong to the scope of inter-organizational collusion. Later, some economists especially Laffont and Tirole introduced collusion theory into the study of intra-organization and built up a general framework of intra-organization collusion theory. So far, the study of collusion theory has been involved into the main stream of economics, but the domestic study on it is still rare. Therefore, this paper selects collusion theory, which is the economic front branch, as the study theme, and regards the formation and balance of collusion as the key thread throughout the whole thesis. It discusses the formation mechanism and collusion-proof in the organization in the east-Asia region from the micro aspect, including general analysis of theoretical model and empirical evidence from the East-Asia. Under this framework, there are at least three kinds of collusion in the modern economic structure: 1) collusion between managers, who act as agents; 2) collusion between supervisor (agent) and manager; 3) collusion between controlling shareholder and the agent allies. On the basis of the main ideas, the thesis analyzes the balance of collusion. From the theoretical analysis, we arrive at the conclusion that information advantage results in rent and the balance of rent and efficiency determines the formation and restrain of collusion. At the same time, the thesis extends the theory by the concrete example of collusion in the East-Asia and makes empirical test by collecting the data of listed companies in China. Finally, the thesis proposes some policy suggestions based on the evidences.This paper includes seven chapters. Chapter one is introduction, mainly introducing the context, meaning, structure and innovation.Chapter two reviews some classical pappers about collusion theory. First, the chapter reviews the early study of collusion theory in economics—collusion action of inter-organization. Second, the introduction of game theory let the study of collusion theory reach a new level and extend to a new field.Third, Laffont and Tirole built up a general framework (P-S-A) of collusion theory in intra-organization by game theory and imperfect contract theory. In the meantime, Shleifer put forwards the "tunneling effect" in corporate governance, which could not be analyzed by P-S-A framework and challenged the collusion theory. Domestic study mainly focuses on the application and test of a certain side of collusion actions in the corporate governance in the newlymarket. Third, the thesis reviews the related literatures briefly and makes corresponding outlook of the future research.Chapter three develops a basic model of the formation mechanism of collusion. The thesis firstly presents the player, information structure, preference and utility function of the model. Then, it builds up a direct supervision model without collusion, analyses respectively the situation on the background of first order optimum and principal's imperfect information, and considers it as the benchmark. Finally, it pays most attention to the formation mechanism of collusion under the imperfect information, focusing on the formation and balance of collusion.Chapter four analyses the collusion balance and proposes different method of restrain facing different collusion formation on the basis of Chapter three. First, it puts forwards a best collusion-proof mechanism to restrain collusion; second, it analyses collusion restrain, from the perspective of increasing collusion cost and decreasing collusion benefits, including augmenting collusion obstacle and penalty and increasing the benefits of non-collusion(building reputation mechanism) . Third, it discusses the method of collusion restrain from adjusting equity structure, enforcing bank supervision.Chapter five focuses on the application of collusion theory. It describes firstly the "Tunneling Effect"in the corporate governance in the East-Asia, including proposing "Tunneling Effect"and relevant researches, concrete modes of collusion in the corporate governance and depriving "Tunneling Effect" and so on. Then, it takes Livedoor case in Japan and Greencool case in China as the typical examples of "Tunneling Effect".Chapter six is an empirical study. It tests the above conclusions and hypothesis with the evidence from China.At first, the paper reviews some empirical studies .Furthermore the paper defines data resources, sample selection, time-windows selection and study methods. Moreover this paper draws some conclusions from the quantitative analysis of the collusion actions in the listed companies in China.Chapter seven is the conclusion. It summarizes the whole thesis, proposes the corresponding suggestion based on the evidence and prospects the future research.