Study On Market-Oriented Reforms And Government Regulation In Municipal Solid Waste Industry

The development of municipal solid waste (MSW) industry started late in China. For a long time, the MSW disposal services are considered pure public goods and provided completely by the government, then forming a strong sense of the administrative management system. Practice has proved that the traditional management system can’t run dynamic, resulting in a serious problems in MSW industry such as insufficiency infrastructure capacity construction, low processing efficiency, technological backwardness. In order to improve the efficiency of waste disposal and promote the rapid development of the industry, by the end of2002, the former Ministry of Construction issued "The Proposal on Accelerating the Market Oriented Reforms of Municipal Utilities", fully implementing market-oriented reforms in MSW industry.The market-oriented reform in MSW industry has made remarkable achievements, but many problems have encountered. In this paper consider MSW industry’s market-oriented reform as the research object, using the research methods such as the method combined qualitative and quantitative analysis, multi-case studies and game theory, systematically study on market-oriented reforms and government regulation in MSW industry. Based on the relative theories of and literature, the paper analyzes technical and economic characteristics and product attributes of MSW industry, reviews the development of market-oriented reform in MSW industry, and does an empirical study on the performance about the MSW industry’s market-oriented reforms by constructing the index system. Then considered the pay reform in the MSW industry’s reduction chain of the upstream and the franchise reform in the final disposal of the downstream as the main content, the paper studied the policy implementation effect of the pay reform and risks faced in MSW disposal franchise which reflect the property rights reform and competitive reform in the of the MSW industry. To solve these problems and risks the paper proposed the government regulation designs by deepening the MSW industry’s market-oriented reform from three aspects:entry regulation, price regulation and quality regulation. The main contents are as follow:First, the theoretical basis and literature review. From three aspects such as the theoretical basis for market-oriented reforms in municipal utility, franchising theory and relative literature, market-oriented reform in MSW industry and government regulation, the theory and literature of the paper has been combed and reviewed. The relative theoretical basis of market-oriented reforms in municipal utility are the public goods theory, the new institutional economics theory and incentive regulation theory; In the part of franchise theories and literature review, the paper sort out the basic issues, key issues and the new research progress of the franchise; In the part of market-oriented reform in MSW industry and government regulation, the paper review the relative policy, key issues and new research progress.Second, the market-oriented reforms in MSW industry:development retrospect and performance evaluation. The paper analyzes technical and economic characteristics and product attributes of MSW industry, reviews the development of market-oriented reform in MSW industry, through constructing the index system and collecting variable data, established the fixed effects model to evaluate the performance of the market-oriented reform in MSW industry. The MSW industry can be divided into several processing chains such as cleaning, collection, transportation and terminal disposal. Its terminal disposition area to some extent exhibits regional monopoly, economics of scale and asset specificity. Market-oriented reform in MSW industry can be divided into three stages:namely the initial trial stage, the full implementation stage and the regulation stage; After evaluating the performance of the market-oriented reform in MSW industry, the results show that market-oriented reform has improved the performance level in MSW industry.Third, the pay reform in the MSW industry’s reduction chain of the upstream part: theoretical models and empirical testing. Pay reform as an important part of MSW industry’s market-oriented reform, occurred in the upstream part of the reduction. Charging is an effective means to promote the recycling and reduction. This paper established theoretical models analyzed several factors affecting MSW emissions, explained the income and substitution effects of charging in MSW industry. Based on empirical models, the paper evaluated the impacts come from the factors, for example charging and etc. since market-oriented reform occurred. Then the conclusion shows that charges currently many cities implemented can not effectively promote reduction in the MSW industry. Finally, the paper analyzed the problem existing in the pay reform in the MSW industry. Fourth, the franchise reform in the terminal disposal chain of the downstream part:risk identification and aversion ideas. The franchise reflected the competitive reform and property rights reform is the main implemented form of market-oriented reform in MSW industry. At present franchise mainly occurred in the downstream part of the MSW industry. The paper used multi-case study method to collect typical cases about the market-oriented reform in the MSW industry, analyzed the problems in franchising, and summarized ten major risks the franchise faced in MSW industry. Based on the time factor, these risks can be divided into three main categories:the planning and design stages of franchise, operation and management stage and end terminal control stage. Then the paper proposed risk aversion ideas from three aspects such as industry access, concession prices, and quality control, provided a basis about the regulatory mechanisms designs for the following chapter.Fifth, deepen market-oriented reform in MSW industry:path selection and regulation designs. In order to solve the problem and cope with risks existing in the market-oriented reform in MSW industry, the paper optimized mechanism designs from three aspects such as entry regulation, price regulation and quality regulation to deepen market-oriented reform in MSW industry. In the entry regulation aspect, the paper proposed the idea that specific business areas should be considered in MSW industry’s entry regulation and designed an auction model with the separability. In the price regulation aspect, the paper designed franchising pricing model of MSW disposal, after determining the charging standard reflected the cost, the paper designed a fixed-floating charge system reflected the competitive incentives of the industry’s upstream part, thus to perfect the price regulation pattern. In the quality regulation aspect, using the game theory, the paper established Multi-stage game models and analyzed the reputation incentives and social supervision can significantly improve the quality regulation level in MSW industry.Relative to the existing research literature, the possible innovations of the paper can be summarized in four aspects:First, construct the index system and do an empirical study on evaluating the performance of market-oriented reform in MSW industry. Using inter-provincial panel data of2001-2011,the paper built a fixed effects model, examined several factors affecting the performance of MSW industry under the market-oriented reform, such as waste charging, domestic garbage treatment expenditures, fixed asset investment about waste disposal, number of vehicles and equipment designated for municipal environmental sanitation, number of harmless treatment plants. The conclusion shows that market-oriented reform has improved the performance level in MSW industry.Second, propose a new price regulation pattern of the MSW industry combined franchise charging and fixed-floating charge mechanism. The price regulation in MSW industry mainly contains two aspects:pricing and charging. In order to cope with the problems existing in the pay reform, the paper analyzed the factors affecting the price of MSW disposal, including the constructing and operating costs, revenue, MSW volume, and the franchising risk factors, then designed franchising pricing model of MSW disposal reflected the disposal cost. Considered the disposal price as the charging standard, the paper designed a fixed-floating charge system reflected the competitive incentives of the industry’s upstream part, thus to perfect the price regulation pattern.Third, through constructing theoretical models and doing the empirical test, the paper studied the policy implementation effect of the MSW industry’s pay reform. Pay reform is an important part of MSW industry’s market-oriented reform. The paper established the household waste emissions and recycling theoretical models, and analyzed several factors for example charging affecting MSW emissions, explained the income and substitution effects of charging in MSW industry. Then the paper constructed the index system and built a fixed effects model, examined the policy implementation effect of the MSW industry’s pay reform. The conclusion show that:MSW emission is increasing along with the raise of waste charge, and along with increase of the citizen’s income, and along with the expansion of the urban population. In addition, MSW emission emerges a first decreasing then increasing trend along with the increasing per public expenditure.Fourth, use the game theory, design the multi-stage quality regulation game models that introduced reputation incentives and public participation. An important part of the municipal utility’s market-oriented reform is to cultivate and design the mechanisms that promotes interaction between the regulator, regulated firms and the public which are called "the Third Force", attach the importance to public participation in government regulation, mobilize the enthusiasm of the public participating in government regulation. Therefore, the social supervisor should be brought in quality regulatory system by the regulator. This paper attempted to establish the multi-stage quality regulation game models that introduced reputation incentives and public participation, and gain the conclusion that reputation incentives and social supervision can significantly improve the quality regulation level in MSW industry.