Research On Correlation Between Excess Production Capacity And Market Structure

As a common operation status of enterprise, excess production capacity is expressed and explained from various angles by every relative sphere. Excess capacity depicted by merchant theory in microeconomics is such a situation that non-economy factors beyond the ridge line which is connected by the turning points when the isoquant curves back do not replace each other any longer. It is a disposition situation that factors increase and decrease at the same time. Modern merchant theory and management science sphere call it the crowded-factors phenomenon while accounting record it as settle cost in account item. But modern merchant theory explains it an unused property situation caused by decrease of property liquidity.Excess production capacity problem exists usually and commonly as a phenomenon in practical economic activity. It involves research results about excess capacity in concrete trade. But there are many profound reasons and backgrounds leading to excess production capacity, while this research result which probes formation mechanism of excess capacity is so little, and haven't formed a complete theory system until now. Nowadays, similar research results which can be draw have two aspects. One is measure method of excess production capacity, the other is problem with enterprise competition and excess capacity forming.During the research, which is based on the competitive cause of excess production capacity, it is attributed to the excess competition and the strategic behavior, the latter is deemed to be the mostly factor. In the research on the modern theory of industrial organization, Rational decision-making has revealed the manufacturer's production capacity could lead to a state of idle assets. And the rational decision behavior of the manufacturer can be summed up as two kinds of forms of expression. One kind can believe threat strategy for the surplus production capacity of obtaining the advantage and adopting in the competition, regard this as the barrier of entering to prevent the rival from entering. The result of such strategic behavior can be interpreted as rational surplus production capacity to choose too. With believe that another kind of strategic behavior that threat strategy is corresponding is, regard production capacity of the surplus as and show one's own strength to the commitment tactics of the customer and cooperative partner.It is significative that doing research on correlation between excess production capacity and market structure. For manufacture enterprises, under certain technical condition, excess production capacity represents the improper input of the production factor quantity, which causes production stagnation and lower output. For manufacture industry, production factor congestion represents the general idle capital asserts and lower utilization. It is obvious that production factor congestion has the direct affect on synthesis efficiency of manufacture, so censoring excess production capacity of an enterprise is significative for it to well know its producing state,collocation efficiency of resource and efficiency of technical utilization. There out, the research of excess production capacity has the great practical guidance significance with the production,technique and competition level for a industry or an enterprise.Based on previous research results, from the new research perspectives and methods separately, the thesis analyzed the competitive causes of excess production capacity, and carries on the thorough analysis to the main causes of the excess production capacity----manufacturers strategy behavior, found that there is an important relation between the manufacturers'strategic behavior and the market structure where the manufacturers in, then has done a thorough study on the relationship between the excess production capacity and the structure of the market.Based on analyzing the competitive incentives of excess production capacity, in the second chapter this thesis expounded on the basic issues of excess production capacity, introduced several basic theories of excess production capacity measures and how to practice. After comparing the estimation to three methods of excess production capacity, according to the data used in this paper, as well as the need for researching and analyzing, the thesis selected PTP to measure the level of excess capacity in some industries, and got a better measure result.In the third chapters, this thesis firstly introduced the basic contents of the market structure and part of the deciding factor. Then analyzing the relationship between the excess production capacity and the market structure in the level of whole manufacturing industries, imposed a regression analysis model: CU it =α0 it+α1itLIit+α2itSit+α3itAit+α4itNit+μit and introduced each indicator, also selected the financial data from 2002 to 2005 of all manufacturing sectors, then tested the correlation between the excess production capacity and the market structure factors. The result showed that in the whole manufacturing sector level, there isn't a significant linear relationship between excess production capacity and market structure factors. The result is similar to the previous study results of some foreign scholars.On the aspect of the whole manufacturing industry, there is not a remarkable relation between excess capacity and market structure. But it is not true the relation exists between excess capacity and market structure, because of difference of every manufacturing industry, make market result to produce can surplus influence the same. Therefore chapter four of this paper regards several typical trades as the example, can produce the relation excess capacity between the market structure. And adjust the model: CU it =β0 it+β1itNit+β2itSit+β3itAit+μitWe selected the monthly financial indicators and data which is from 1999 to 2006 of five typical manufacturing industries including the tobacco industry, the plastic products industry, the garment and sportswear manufacturers, general equipment manufacturing industry and special equipment manufacturing industries for analysis, got a better regression effect, then classified the result and analyzed the law. It is found that in different market structure, the strategic option, excessive competition and production overcapacity changes of the manufactures were different either.This paper come to a few conclusions: competitive factors play a leading role in many incentives of the excess production capacity. Competitive factors include the strategic option and excessive competition. The strategic option of the manufactures closely relate with the market structure where they are. Therefore, it is indicative significance to research the relationship of excess production capacity and market structure. The results of the manufacturing sector in the intergovernmental level show that there is not a significant linear relationship between excess production capacity and market structure in this level. But in the level of some typical industries inside the industry, the relationship between excess production capacity and market structure is significant. under different conditions of market structures market structure and production overcapacity is showing different characteristics. It is of great significance to further research of production overcapacity with the result of this paper.