The Studies On Tacit Collusion Between Real Estate Enterprise Under The Market Structure Of Regional Oligopoly

Since the end of the 1970s, Housing System Reform made the real estate industry grown out of nothing and became the pillar industry of China economy. However, with the commercialization of the real estate industry, accompanied by a variety of market failures and government failures. First, the housing price in China is more than 12 times as high as the income perennially, furthermore, the housing price is also far beyond the real purchasing power. Secondly, there exists obvious "double high paradox"——The coexistence of high vacancy rate and high housing price——in the real estate market of China. Thirdly, the serious imbalance of supply and demand goes against the purpose of Housing System Reform. Finally, we can find that the macro-control of real estate market failures is inefficient during the process of transition of the government's attitude towards high housing price from prevention to restraint and then to containment.This paper holds that, the main reason for the real estate market failures in China which are featured by less of competition and high housing price is the tacit collusion between real estate enterprises under the market structure of regional oligopoly. According to the SCP paradigm of the harvard school, market structure decides market behavior, and then the latter decides market performance. Therefore, in order to research the property market and the government's double failure, we must first analysis the evolution and status quo of the property market structure of China. This paper divided the evolution of property market structure of China into three stages:The first phase refers to a period of central-planned economy still before the Housing System Reform in which administrative monopoly was the basic character; The second phase is from the Housing System Reform to the Reform of Monetization in housing distribution in 1998,in this period, the structure of real estate market appears to be regional state-owned enterprises monopoly; The third phase is from 1999 to present, at this stage, although so many kinds of real estate enterprises came forth, the concentration of market has been increased by integrating the market share and the market force, so the market structure of regional oligopoly has already emerged or is being taking shape.The trend of regional oligopoly structure and low price elasticity of demand makes the oligopoly firms have a strong motive of collusion to maintain monopoly status and superprofit by executing their market forces. At the same time, local government activities for political and economic rent, which lead to the macro-control of real estate market frequent failures, afford a premise such as the absence of regulation for the collusion between real estate firms. Because of the persistent mutual relationship among real estate firms that make the competition between them can be viewed as an infinitely dynamic game under the structure of regional oligopoly, therefore, in order to avoid the prisoner's dilemma, firms that already have been in the market will build strong strategic entry barriers in face of the threat from potential entrants. In addition, by comparing the gains the real estate firms respectively get from price competition and quantity competition and price collusion, we can see that only the price collusion is their reasonable choice. Further more, the real estate enterprises usually take tacit collusion as the main form of collusion for avoiding the heavy fines and government regulation.In order to break down the tacit collusion between real estate firms and facilitate the orderly operation of real estate market, this paper put forwards that the relationship between central government and local government must be rationalized, and establish effective mechanism that can inspire and restrain the behavior of the local authority correctly, so that we can lead the local government to return to the rationality and get rid of the state of being captured. Second, we must increase the penalty by improving and implementing The Act of Antitrust effectively. At the same time, we also can turn down the stability of tacit collusion by the Leniency Program. Finally, we should consider to use price regulation to collapse the tacit collusion between real estate firms under the situation of ineffective macro-control.