An Empirical Analysis On Market Power Of Knowledge-intensive Service Trade In China

Market power on services is a cutting-edge issue on the theory of industrial organization in recent years. Market power means during a given period, in the not perfectly competitive market, some companies have the ability to maintain the price above the marginal cost that is the so-called pricing ability. Since 1994,because of GATS signing and implementing, international trade in services emerges in a sudden and develops much faster than trade in goods, which has a high knowledge, high innovation, high interaction, high value-added knowledge-intensive services becoming the fastest growing trade.Consequently, putting knowledge-intensive service of trade as an entry of point, intensely studying the market power of Chinese export trade in all sectors of knowledge-intensive services, and then anglicizing the factors, at last putting forward the corresponding countermeasures and suggestions are of great significant. It will benefit to promote economic to grow steady. In additionally, this study will contribute to change the pattern of growth in international trade, restrict and upgrade the industrial structure.In the empirical process, firstly, we use the panel data of 1997 to 2008 in the industry of seven knowledge-intensive services; quote the Hall's price-marginal cost index model. Secondly, divide the determinants of market power into several parts:changes in output, exports (including export volume and price), employment, domestic wages and technological progress, then measure the market power of these industries. On this basis, this article uses the data of 1997 to 2008 on total exports of China's trade in knowledge-intensive services to establish the time series model to measure the market power. The empirical results show that, although exports of knowledge-intensive services grow fast, trade deficit continues to widen, the development of the industry is unbalanced, and the international competitiveness is weak. In these seven industries, the market power of construction services, communication services, financial services, insurance services, exclusive patent rights and license fees, computer and information services is weak; almost do not have the capacity to control the price. Only in the industry of consulting, advertising and personal entertainment there is an obvious market power. As a whole, the market power of the seven knowledge-intensive services on the exports is weak too. But, by the in-depth anglicizing, it is noteworthy that, the market power shows the trend of enhancing.Based on the empirical analysis, there are some suggestions:on the one hand, promote the development of knowledge-intensive industries vigorously to obtain the scale advantages, lead local multinational corporations to participate in international competition to improve the ability of pricing. On the other hand, we must continue to enhance the capacity of independent innovation, improve more added values to the products, and carry out the strategy of differentiation. From the perspective of national policy, we should pay more attention to the development of knowledge-intensive industry, establish the corresponding laws and regulations, continuously improve the management system.