Special Japanese Legal System Formation And Evolution

Even in the pure market economy, the market itself, as the main mechanism of allocating resources, does not work in all the circumstances. When the market fails, it is very important for the government to intervene especially by taking advantage of its special legal entity. Beside of Japan, although the special legal entity exists extensively in many countries, especially developed countries, it is not come into existence in a formal way at present in China. This special legal entity not only helps to promote the government to perform its economic function better, but also will be the typical organization form.This thesis investigates the establishment mechanism, operating mechanism and evolving process of Japanese special legal entity by using empirical method and intends to sum up and analyze the main experiences and lessons. The main purpose is to offer some valuable experiences for Chinese government during the establishment of special legal entity.The fundamental firm theories and method of game theory are employed for analyzing the special legal entity institution. The thesis focus on the following aspects of the topic: (1) the pricing method of the natural monopoly firm with the governance form of special legal entity. The thesis lists and compares the following pricing method such as average cost pricing, marginal cost pricing, Ramsey pricing, standard two-part tariffs and adjusted two part tariffs, fair rate of return regulation and ceiling price regulation; (2) analyzing the bargaining between regulator and the regulated firms and established a mathematical model to illustrate how to constraint the special legal entity and its manager incentively under the asymmetric information; (3) as case studies, the thesis probes the Japanese pricing method for speed way and proves that the congestion fee are of help for reducing the economic welfare loss.The thesis is expected to contribute to the literature in this field in the following aspects: (1) proving that the special legal entity is an effective institution design for the government to performing its economic function after a thorough examination of the special legal entity; (2) pointing out the adjusted two-part tariffs pricing method, which considers the differentiated preferences of consumers and satisfies the break-even condition; The adjusted method is close to the reality and make the price regulation of natural monopoly easy to implement; (3) establishing the incentive constrains model of the special legal entity and its managers under the asymmetric information; (4) providing some constructive suggestions for determining the appropriate fields in which special legal entity suits and coordinating the laws.The thesis is organized as follows. Firstly, the thesis compares the alternative definitions of special legal entity and points out the definition of this research, and discusses the nature, classification standards and organization form of the special legal entity.Secondly, the research examines the establishing backgrounds, legal justifications, sources of registered capital, organizational structure and operating conditions of special legal entity. This chapter also points out that the special legal entity is suitable to locate in the fields of natural monopoly, public goods, industry reconstructing and industries that are contributes to the social stability.Thirdly, the thesis focuses on the board of directors of the special legal entity, and compares that with the non-special legal entity board of director. In the same part, the thesis also analyzes the legal privileges and specific accounting rules stating that it is not only unrealistic for the special legal entity to be thoroughly independent of government, but also it is an important source for the government to fulfill its economic functions.As the core content, the research examines the pricing mechanism of the natural monopoly firms governing by the special legal entity institution. Based on the understanding of the shortage of alternative pricing methods, the thesis advances the adjusted two-part tariffs pricing theory which is close to reality and easy to be implemented. In this chapter, the author also exploits the theory to analyze the advantages and disadvantages of Japan high speed way pricing system and congestion fees. After the analysis of the bargaining between government and the special legal entity firms, the thesis also establish an incentive constraining model which describes how to constrain the se and its managers under the asymmetric information. The thesis furthers the research by investigating the background of the evolvement from special legal entity to independent administrative legal entity and also investigating the justifications for the evolvement and the relevant institution coordinating. The thesis proves that independent administrative legal entity is in fact an advanced stage of special legal entity.Finally, by discussing the specific institutional arrangement of the legal entity in European and American, the thesis concludes that special legal entity is an important instrument, using which the government is able to intervene with the economy and achieve its management goal. In the last part, the thesis offers some systematic suggestions for the Chinese government to establish special legal entity and coordinate the relevant law. The suggestions are based on the analysis of the experiences and lessons of Japanese special legal entity.