The Study On Relationship Between Chinese Manufacturing Industrial Technology Characteristics And Its Market Structure

As an original systemic theory in theory of industrial organization, thegreatest contribution of Bain's Industrial Organization is defining the S-C-Pparadigm as the central content of conventional theory of IndustrialOrganization. Bain's Market Structure and Market Performance paradigm isthe first form of this paradigm. In Bain's opinion, the fundamental meaning ofStructure-Conduct-Performance is emphasizing market structure is thedeterminative factor of enterprise conduct; in a given market structure,enterprise conduct is the determinative factor of market performance. Thestarting point of S-C-P paradigm analyses are two basic market models:perfectly competition and perfectly monopoly. Of course, on the other hand,S-C-P paradigm also recognizes that the market structure and the behavioritself are outcomes of a series of industry-specific technologicalcharacteristics and market forces. Therefore, the analysis of correlativedeterminative factor of market structure and enterprise conduct is theimportant component of Bain's Industrial Organization. However, same asMason who put forward the initial scope and the study direction of the theoryof industrial organization, Bain ultimately did not act on his proposed S-C-Pparadigm to make further more generalized whole explanation, in particular,the market's determinative factor and its impact on the market performance,and all parts of the so-called feedback effects in S-C-P paradigm. UntilScherer's Market Structure and Economic Performance was published in 1970,the S-C-P paradigm of traditional theory of industrial organization hadreceived a systemic whole explanation. A problem which we must notoverlooked when studying the phenomenon in the real economy is that there isa necessary relation between the industry's technological characteristics andmarket's structure, and a necessary relation between market structure andenterprise conduct. Enterprise conduct as an exogenous variable must directlyaffect the market structure-an endogenous variable of a market. It is preciselybecause of the technological characteristics will be developed to a certainextent, spurring industrial enterprises in the internal divided, relying on its own technical strength, minorities has been increasing steadily in the internalpower industry is continually growing. By improving the overall technicalstrength of the industry, the minorities correspondingly become severalmonopoly enterprises which concentrated the most production in theindustries'interior. In this change process, with the technologicalcharacteristics'upgrading, the market structure develops from a competitionindustries to monopoly industries. Studying the relationship betweenindustries'technological characteristics and its market structure, furtheranalyzing Chinese industries become the main content of this paper.In this paper, we will discuss three problems. The first one is about themeasurement of manufacturing industrial technology characteristics andmarket structure, the second one is about the method of analyzing therelationship between industrial technology characteristics and its marketstructure, and the last one is about the impact of industrial technologycharacteristics acting on market structure in China. The motivation ofstudying the three problems comes from: 1. S-C-P paradigm is a classicaltheory in industrial economics, and is an important tool in studying marketstructure, corporation's conduct and corporation's performance. Industrialtechnology characteristics are the important factors in impacting corporation'sconduct. Consequentially, industrial technology characteristics have theinfluencing relation with market structure. 2. With the Chinese economy's fastdevelopment, measuring the impact of industrial technology characteristicsacting on market structure has important significance in accelerating thedevelopment of Chinese economy perfectly.Based on the above considerations, we choose the time series analysismethod. By using Chinese 29 manufacturing industries monthly industrialdata from 2001 to 2005, make the marginal rate of technical substitution andaverage fixed capital as explanatory variable, the industrial concentration asexplanatory variable; establish a time series analysis model: By empirical analyzing the influencing degree and evaluative trendswhich the industrial technology characteristics acting on market structure, wemake the main conclusion: at a low level of technology in the industry, withtechnical upgrading, structure shifting from labor-intensive to capitalintensiveprocess, a slightly positive changes of the marginal rate of technicalsubstitution and average fixed capital will make a greater positive impact onits market structure. With the process of gradual improving in technology, asthe positive changing of the marginal rate of technical substitution andaverage fixed capital, the impact technological characteristics acting onmarket structure will be gradually lowered. For some high-tech industries,because they are capital-intensive industries, the impact of industrialtechnology characteristics acting on market structure will be lower, evennegative. As technical content, the industrial concentration will be reduced,leading to intensified competition between enterprises in domestic industries.As we joined in WTO, china's reform and opening up has entered a newhistorical stage. The economic globalization accelerates development andperfection of our country's market economy, thus put a more urgent request tothe development of industries. We should draw lessons from successfulexperience of the foreign country and speed the reform step of industries.According to the real requirements of the market economics, we should buildup industries; enable them to play an active role in the new economicenvironment. In view of the current situation of China's industries andsuccessful experience abroad, I think we should begin from the followingaspects: construct good development environment for the development ofindustries, consummate the legislation, handle the relations with thegovernment correctly, strengthen the construction of itself, improve workefficiency and quality. It should play a new role in the creation of national brands, and promoting industrial clustering shape, and the settlement ofinternational trade disputes.