Government Regulation Theory And Empirical Research

In this paper, the problem of government regulation was discussed theoretically and practically. In theoretical aspect, the framework for analysis of market failure was first established. The paper also points out that the government regulation plays an important role in rectification of market failure. Then by using the method of conjectural variation in the theory of partial equilibrium, the inherent relationship between various type of market and social welfare lost was studied. The paper also points out that the essential reason for the government regulation is lost of justice and efficiency, and by means of equilibrium condition, the boundary of traditional regulation was determined. Finally, the characteristic of price mechanism and policy plan which is tool of government regulation was reviewed. For new problems of economics of regulation which can not be solved by way of price mechanism, such as asymmetric information, exterior and public goods, the concept of incentive regulation was introduced.In respect of practice, the paper regarded the publishing industry of our country as a sub-system of macro-economy system. The paper investigated the government regulation of national publishing industry by means of industry organization theory, principal-agent theory and system optimization method and etc. Firstly, by investigation of industry organization of national publishing industry, the article points out that the market of teaching material for the elementary and middle school students will be main target which should be under control by government regulation, since it has the characteristic of public goods and nature monopolization. Then, by studying of current administration policy for teaching material, the disadvantage of such service cost regulation was indicated by this paper. Finally, by using of principal-agent theory on condition of asymmetric information and under the frame of equilibrium theory of optimization target, the article regarded procurement of government of teaching material for the elementary and middle school students as optimization problem of non-linear programming and provide the answers by the method of dynamic optimization. The paper draws the following conclusions: (1) under optimized incentive agreement, company's performance (saving of cost) proportions the slope of incentive project. The most efficient company will choose fixed price agreement surplus gainer of cost saving. Other kinds of company will choose the agreement whose price is between the fixed and cost price; (2)Key problem of incentive mechanism is how to make balance between risk and incentive factor, incentive effect is related to the risk attitude of agent, if the agent hated risk, the incentive effect will not be clearly and vice versa; (3) Optimized auction mechanism will not influence the part of incentive earning of chosen firms, the above mechanism plays a role in reducing fixed earning of chosen farms. Finally, this paper gives some suggestions for national publishing industry.