Natural Monopoly Industry Access Regulation Timing Study

Facing the regulation release tide which influences the seven seas in the natural monopoly domain emerged from the 1970s, it is extremely essential to explore the time and the rule of the government regulations. This Paper mainly use theory study and case analysis to construct a basic framework of the government regulation in the natural monopoly domain based on the theories of the natural monopoly theory,the Industrial organization theory and the government regulation theory. Thus it establishes an identification mechanism of government regulation in the natural monopoly industries. The paper concludes that characteristic analysis of the natural monopoly is premise and cost-income analysis of the regulation is the core when determine the regulation time. For the latter, the paper established a theoretical formula of the cost- income analysis about the government regulation by using the basic methods of cost-income analysis and through to the inspection of the social net income. That is f(c₀, c', r₀) = 2(C₀-R₀)-C',i.e. thegovernment should implement the admittance regulation when 2 times of the social welfare loses surpasses the direct cost arising from the regulation. Combining these two analysis, it concluded that only when the natural monopoly characteristic as well as the enterprise satisfy the request of the admittance regulation and the net social benefit exceeds is bigger compared with before, it is necessary to implement the entry regulation.