Structure Evolution, Product Innovation And Performance Evaluation Of Chinese Telecommunications Market

The dynamic relationships among innovation, market structure and market performance in Chinese telecom market were studied with DEA models, econometric analysis and game theory methods based on SCP paradigm. It is showed theoretically that the systematic approaches to the relations among innovation, market structure and market performance were boosted through inducing innovation to SCP paradigm and establishing a logic framework about innovation, market structure and market performance. And the dynamic efficiencies instead of static efficiencies were adopted in SCP market performance analysis, which emphasizes the ipmpacts of innovation on economic growth and market expanding and hence improves the traditional SCP efficiency concepts.Under the SCP framework, the innovation behaviors in Chinese telecom market were reviewed segmentationally from Xiaolingtong in mobile telecom market, IP telephone in long-distant fixed telecom market, QQ in instant messaging market, ADSL in broad band connecting market, to 3G in future telecom market. It is demonstrated that the product innovation processes were advanced remarkably by demonopolization in market structures, and the market structures were notably optimized by product innovation. At the same time, the multangular analyses on the market performance were set up including industrial technic advancement, consumens'surplus enhancement, firms'operative performance and market extenalities, and were used to evaluate the Chinese telecom market performances, which confirm a significant forward moving in productive efficient frontier, a great increase in consumers'welfare, a huge upgrade of operators'core competence and a full expandation of market extenalities, and then prove a distinct jump of market total performance and a fruitfull market reform effects. As a result of the analyses, the demand functions of Chinese telecom market was estimated through two stage fixed effect method, by which the improper understandings about demand relations in Chinese telecom market were corrected.The research above also demonstrated a world-shaking change for Chinese telecom market whether in its structure or in its product innovation in the latest decade or more, which reveals a typical process from planned economy to market economy. It is showed that the structure transformation of Chinese telecom market started in 1994 when China Unicom was born, and came into turning point in 1998 when the Ministry of Information Industry was set up, and eventually formed the"5+1"market, which incarnates a substance of persisting optimization in the market structure. The innovative activities of the market were promoted and the capabilities of market innovation were upgraded remarkably through the continuous optimization of the market structure, and hence the market performance was improved evidently. The exaltation of innovative capabilities in Chinese telecom market was mostly represented in the product innovation, and one of the most typical product innovations is'Xiaolingtong', which, with a relative low-grade technology, has entered into Chinese mobile telephone market triumphantly, and boosted the degree of competition and efficiency in that market observably. The market performance improvement was displayed by the industrial technological progress, the consumers'welfare increase, the enterprises'operative efficiency and the market externalities.But whether the reforms in Chinese telecom market has been perfect or not? The answer is not in spite of its acquiring a huge success. Firstly, the"5+1"structure consists of very different segmentation markets in which the market powers are still very great and far from efficient competitions. Secondly, there has existed a high degree of regulation in Chinese telecom market, and the licenses given by government have become entering barrier to the market, which blocks the optimization by market itself. Thirdly, it is necessary to search a balance point between foreign technology adoption and independent innovation, and between international intellectual property rights protection and national R&D supports, and it may bring hell and gone negative effects for the future of Chinese telecom market if treated inappropriately.The research results could help us to understand the reform paths especially the demonopolization process of Chinese telecom market, and support government to make industrial policies, and promote the development of the industry. The study on product innovation could also raise the complex competitive abilities of telecom operators. The laws hinted in the paper might be analogous to other markets such as communications, posts, broadcast and television, and public utilities.