An Analysis Of The Effects Of Economic Monopoly

This dissertation studies economic monopoly, and constructs a three-dimensional analytical framework composed by competition, technological innovation and resource allocation. It focuses on the effects of economic monopoly on market competition, technology innovation and resource allocation, and tries to provide new theoretical supports for the making and enforcement of anti-monopoly policies.Through the economic and law analysis of the definition of monopoly, we can find that the definition and connotation of monopoly are dynamic, developing and changing. Monopoly can be classified into different categories. In terms of causality, monopoly can be divided into four forms: administrative monopoly, legal monopoly, natural monopoly and economic monopoly. This dissertation mainly discusses the economic monopoly and defines it as that one or some enterprises have exclusive market power in special markets through competition and concentration. Based on the evaluation index measuring the economic monopoly, the dissertation pinpoints"four mechanisms": the subject-motivation mechanism, the objective-motivation mechanism, the lever mechanism, and insurance mechanism, and divides economic monopoly development into three periods. Meanwhile, it makes a general theoretical analysis of three typical theories: the theory of disadvantages, efficiency theory, and duality. It points out that it is exactly the confusion between the two pair of terms: market monopoly and market monopoly behavior, and economic monopoly and administrative monopoly, that causes the domination of"the monopoly disadvantage theory", which provides a basic platform for further discussion of economic monopoly effects.The anti-competition characteristic of economic monopoly has become a direct cause that government regulates economic monopoly. Therefore, this dissertation firstly analyses the competition effect of economic monopoly systematically and profoundly. By tracing the evolution of the connotation of competition, we believe that competition, as a market mechanism, means a process or movement in which rational individuals seek benefits and success. Based on this, we discuss the overall effects which economic monopoly affects competition. Using systematic theory research and empirical analysis of existing data, we get the first conclusion: economic monopoly becomes the dominant market structure of modern economic life after economic monopoly replaces free competition. Economic monopoly which grew up from free competition does not exclude and eliminate competition. In long-term and dynamic perspective, economic monopoly permits and includes competition, and may promote the strata, quality and efficiency of competition. The new form and features of competition in modern economic monopoly state are: the evolution from a single price competition to diversified non-price competition; evolution from atomic enterprises for free competition to the all-round competition monopoly enterprises; the competition between individual enterprises extended into " competition for value chains " or " competition for networks " between the enterprises; and competition evolution from confrontation to cooperation.Technological innovation is a decisive factor in industrial structure optimization, upgrading and long-term economic development. Whether economic monopoly impedes or promotes the development of technological innovation is an unavoidable and important issue. Looking at existing research literature, the economic monopoly in technological innovation perspective on the theory and empirical findings can be divided into three categories: first, the mainstream economics popular viewpoint: economic monopoly obstructing the development of technological innovation; second is "the Schumpeterian Hypothesis " and " the Calbraith,View": the more monopoly in market structure, the more active the degree of technological innovation; and third, Kaimen and Schwartz's views, representing a compromise perspective: a market structure mixed by monopoly and competition is most advantageous to promote technological innovation. Of course, there are other theories, such as the inverted U-type theory, stage theory, industry differences theory, uncertainty theory, and other viewpoints. All these views'differences center on the effects of economic monopoly on the motivation and ability of technological innovation. In terms of the motivation of technological innovation, economic monopoly produces innovation motives by keeping competitive pressures, market demand pull-up effects, and profit incentives. As for technological innovation ability, economic monopoly has significant advantages of technological innovation. By the theoretical analysis and a large number of empirical comparative studies, this dissertation obtains the second conclusion: economic monopoly is conducive to the development of technological innovation. The dissertation also analyzes the causes why different empirical studies of the effects of economic monopoly came to different conclusions, and from 8 aspects, we summarize significant advantages an economic monopoly enterprise has in technological innovation.Mainstream economics think that economic monopoly reduces the efficiency of resource allocation, resulting in senseless loss of social welfare. This is due to a government anti-monopoly policy economics root. Thus, this dissertation starts the discussion for the resource allocation effects of economic monopoly, which becomes a third dimension of the article's analytical framework. Based on defective analysis for mainstream economic theory perspective and analysis measures, we point out the false features behind those views, and the limitations in the methodology of those static analyses. The dissertation then discusses how economic monopoly can improve the efficiency of resource allocation through economy of scale, scope and learning process, so that social welfares are increased. Therefore, we get the third conclusion: economic monopoly is the result of optimizing resource allocation, and it in return, facilitates the optimization of resource allocation.In the last part, the dissertation clearly suggests that administrative monopoly be eliminated through deepening reforms and strict anti-trust enforcement, and that abuses of economic monopoly behavior be strictly regulated.The new ideas of the dissertation can be summarized as below:(1) It separates economic monopoly, a common market phenomenon in many market economies, from other monopolies. This article takes a new research approach which combines empirical analysis and normative analysis, historical analysis and logic analysis, economic analysis and law analysis to carry out the research on economic monopoly effects in three dimensions, i.e., competition, technological innovation, and resource allocation.(2) It summarizes and refines the forming mechanisms of economic monopoly as the subject-motivation mechanism, objective-motivation mechanism, lever mechanism and insurance mechanism. Based on this, we separate economic monopoly into three periods for western developed countries. In the early of 20th and the end of 19th century, this is governing market structure period that economic monopoly replaced free competition. From the World War II to the 1980s, this is scale developing period for economic monopoly. Since 1990s, it is the new developing period.(3) It makes a comprehensive analysis for giving rise to disadvantage theory of economic monopoly, and points out that the limitations and thought-provoking negative effects advanced by Adam Smith about monopoly.(4) By inspecting the operating conditions of competition and multi-dimensional systems, we define competition as action which rational economic individuals seek profits; and the fundamental operation conditions of the mechanism of competition is the free and open market .(5) From the perspective of long-term dynamics, it uses the latest theoretical tools including game theory, discusses overall effects for monopolistic competition, oligopoly and monopoly to competition, and extensive experience; uses the empirical data analysis of the economic monopolies and makes the conclusion that economic monopoly may promote competition.(6) In a comprehensive analysis of the motivation and ability of technological innovation of economic monopoly on the basis of summarizing the eight advantages of technological innovation, it is easy to make reasonable explanation for different empirical analysis giving rise to the different phenomena.(7) Based on the discussions of economy of scale, scope, and learning effects of economic monopoly, it further supports a total researching conclusion that economic monopoly benefits technological innovation and economic development.