Market Power Of Chinese Export Industry

Market power is an ability that practice Mark-ups over marginal cost in certain time. Unlike previous research on market power about monopoly industry and the welfare of the society, the masterstroke of this paper is the empirical of market power and mark-ups in export market. We use revised Hall's Model to estimate the potential market power of cotton, hemp, silk and clothing industry. We have made an analysis of the discrepancy between potential market power and realistic market power face by Chinese textile and clothing industry. Accordingly we propose some suggestions for enhancing the market power practiced by China's textile and clothing exports.In the estimation part, we use price over marginal cost as indictors of market power, we introduce export into Hall's model and decompose the factors effecting market power as follows: the quantity of output, the quantity of export, the number of workers in this industry, the wages of the worker, and the progress in technology. Considering the characteristic of Chinese textile and clothing market, we study it in two periods with Hall's Model.Through positive study, we found that the potential market power in this four industry is very prominent, moreover the hemp and clothing industry have a trend of Immiserizeing Growth. However, after China's entry into WTO, the market power of the four industries has been strengthened, the tendency of Immiserizeing Growth in hemp industry has been eased. But compared with realistic Market power, we found that the potential market power have not fully changed into realistic market power, in the other word, the realistic Market power deviate the potential market power. Through analysis we found that excessive competition, homogeneity of the commodity and foreign middleman is main reasons that lead to the discrepancy.In the end of the paper, we propose suggestions as follows: Attach importance to the innovation and promote the capacity of technical innovation of all industry; Better the industrial organization by setting up dominant firms as "Market Representatives" or alliance of firms as "Corporate Agent"; Carrying out strategies of product differentiation and product brand; Encourage the government to steer the competition and do favor to the exports industry.