Research On The Prevention Of Commercial Fraud From The Perspective Of Economics

As the old sayings said:"people can not stand without honesty","people do not trust the one who do not have honesty". The virtues of honesty are always a good tradition of China. But nowadays, in the21st century the market is facing a credibility crisis. Fraud scandals continue to be exposed in commercial areas, fraud tricks come out one after the other, the prevailing winds of fraud have been regarded as the norm, the bottom line of the public and the regulatory authorities also has been a breakthrough. Fraud exists at all stages of market transactions, including quality fraud and price fraud in commodities trading, contact fraud and credit fraud in commodities circulating, franchising fraud in business investing. These kinds of fraud not only seriously damage the economic order, but also completely undermine people’s confidence in the market. Destruction of the socialist market economy cases is still increasing every year, but the social and the government do not pay enough attention to these cases. The data of fraud have large time lag, the regulatory authorities are not on guard and fraud is also constantly expanding the tolerance of market. Accordingly, the new fraud prevention path is of great urgency.Firstly, this paper collects and summarizes a lot of existing domestic and international literature. Based on the connotation of commercial fraud, this paper tries to analyze the theoretical feasibility of commercial fraud prevention according to asymmetric information theory, institutional economics theory and game theory. Secondly, according to the analysis of commercial fraud forms, characteristics and causes, this paper also wants to explore the nature of commercial fraud from an economic perspective. On the basis of two steps above, this paper constructs the cost-benefit model of commercial fraud and the evolutionary game matrix of fraudsters and government. In the cost-benefit model, the results of single net income formula and the extreme radius of several fraud show that the key factors to reduce the scope of commercial fraud are victim tolerance and fraudsters credibility. From the analysis of evolutionary game between fraudsters and regulators, this paper discusses the meaning of three strategies stable points between fraudsters and regulators from the dynamic equation established by game matrix between the government and fraudsters. According to the current status of commercial fraud prevention, there are still many problems:lack of enforcement functions of the regulatory departments, regulatory confusion, lack of information sharing platform, inefficiency of information transmission mechanism, imperfect of anti-commercial fraud legislation, low motive power of anti-commercial fraud, prevention mechanisms without participation of relative stakeholders. Based on the results of models, this paper considers that:the supervision department should establish the database of fraud information and supervise different fraud types; regulators should increase the cost of regulating in short term while decrease the cost in long term; government should constrain the behavior of regulators and develop more effective incentives. While, the market should make efforts to clear the system of property rights, to shape the economic credibility, to expand the effect of reputation transfer, to optimize the regulatory strategy and to increase the effectiveness of market discipline. Also, the market traders should reduce the degree of tolerance for fraud, and enhance the awareness of victim protection.In order to put the the commercial fraud theory to solve practical problems, this paper analyzes the motivations, current status and precautionary measures of commercial fraud. To sum up, by using normative analysis in economic theory, this paper expects to provide some effective suggestions to protect from commercial fraud from a new economic nature perspective of commercial fraud.