China's Steel Industry Economies Of Scale

This paper consists of 6 chapters. It focuses on the scale economy of steel manufacture in ChinaBased on the comparative study and analysis of different development stages among American,Japan,Korea whose steel industry is strong and representative ,the paper studies problems involved in the scale economy of steel manufacture in China This paper adopts industrial organization technology, which includes "market structure—market behavior - market performance", to analyze the market structure and performance of steel industry in America,China and Korea .The study technology also consists of the date envelopment analysis, which is used to analyze samples of 44 steel enterprises, the MALM model which is taken to test the scale economy of 36 steel enterprises, and the game theory which is applied to analyze the case of Shougang Group relocation and arrives to beneficial conclusions.The paper considers that Chinese steel industry fails to achieve corresponding scale economy and effective competition when it rapidly expands in the volume of production and market scale(J.M.Clark, 1940).The ultimate reason is the incompatibility between the institutional environment and body motivation. Limited information and bounded rationality induces central government's incompatibility between system design and scale economy achievement, and bidirectional effect of industry regulation and steel scale economy .Local government has positive correlation with the development speed of steel industry and has negative relationship with steel industry scale economy under the motivation of revenue and politics. Large state-owned steel enterprise achieves scale production, but larger organization scale offsets the scale economy efficiency of steel industry as to the deficiency of inner motivation and stimulation. the non-public steel industry acquires rapid development and high efficiency in the "lemon market", however its serious outer development induces negative effect to sustainable development of scale economy. The paper includes 6 chapters as followings. The first chapter is introduction made up of main problems; study significance document research summary of Chinese steel industry scale economy .The document research summary introduces industrial economics study of steel industry at home and abroad. The first chapter briefly provides key points, Research ideas, basic framework and innovation. The second chapter introduces theoretic views of steel industry scale economy including Marxism,Harvard School,Chicago School and Neo-Austrian school. The chapter measures optimal size of steel industry and adduces index .It also preliminarily estimates optimal size and international competitiveness of Chinese steel industry. The third chapter is empirical research of steel industry scale economy in development countries, which studies the characteristics of steel industry scale economy,market structure,institutional environment .It also estimates the scale economy of steel industry in developed countries and adduces index of optimal size of steel industry as good approaches China should take for example. The forth chapter does positive analysis to market structure of Chinese steel industry which analyzes development history,characteristics of scale,and estimates Chinese market concentration. The fifth chapter analyzes Chinese steel industry performance positively. It utilizes EDA model to choose,test,and analyze status of 44 steel enterprises from 2004-2007. It also utilizes MALM model to chooses test,and analyze status of 36 representative steel enterprises .The two kinds of model study inspect the effectiveness of scale for Chinese steel enterprises as well as effectiveness of scale for different steel enterprises and attain new conclusion. The chapter analyzes,tests status of labor productivity,labor utilizations emolument,welfare and draws reasons for non-economical scale. The sixth chapter positively analyzes the main factors which affect Chinese steel scale economy. It takes evidence-based technical analysis into the regulation policy we which competent department of central government apply to steel industry. It verifies the validity of regulation policy and analyzes the investment and motivator of local government to prove the effect from the local government It analyzes the behavior characteristics of state-owned steel enterprises with the case of Shougang Group relocation. and does game analysis to verify the institutional reasons of steel industry scale economy. This chapter provides institution variable in game analysis and introduce Pareto improving approach..The complimentary close summarizes the whole paper and gives conclusions. The paper manages to make creation for every conclusion. It studies the market structure of Chinese steel industry creatively and anglicizes the special phenomena of Chinese steel industry market structure. The number and production quantity of individual big scale enterprises are raising compared with the persistent decline of the whole industry. The paper introduces the index of "Elasticity Coefficient of Industry Affinity" and makes calculating and analyzing. This explains the decline of affinity, the special characteristics, improves the index of industry affinity and provides the new vision to understand the steel industry affinity of China intelligently, objectively and roundly. This paper also introduces "steel production Affinity "to figurate Chinese steel production affinity and finds the characteristic that high-end product has high affinity and low wastage and low-end product has low affinity and high wastage. The paper re-estimates market performance of Chinese steel industry scale economy, analyzes managed data from 2005-2007 of Chinese key large and medium enterprise ,and reaches the conclusion that most Chinese steel enterprises has the effective scale or to-be-effective scale and large or extremely large steel enterprises has no various efficiency advantage compared with medium and small steel enterprises. Key large and medium steel combined enterprises have different efficiency which there is institution obstacle for Chinese steel enterprises to achieve scale economy. This paper analyzes the governmental action of Chinese steel industry scale economy to introduce the conclusion that the institutional reason is because the steel industry itself but the macroscopic institutional environment. The game analysis of Shougang Group relocation proves that the scale diseconomy of Chinese steel industry the game result of central government, local government, steel enterprises .The individual rational choices cause collective failure and the scale diseconomy of the whole steel industry .The paper draws institutional variable into game analysis and analyzes Pareto Improving Approach of scale economy for steel industry.