China's Natural Monopoly Industries Government Regulation Issues

Traditional regulation theories believe that natural monopoly industry has the characteristics of scale economy, scope economy and cost of subadditivity, the government needs to regulate them strictly. However, since the 1970s, the theories of frustrated regulation and the development of competitive market can pose a challenge for the theory of traditional government regulation, with the technology progress and market demand expansion, natural monopoly borders have changed, natural monopolies tend to weaken, it requires the ways and means of the government regulation to make corresponding adjustments. On the other hand, the development of the theory of natural monopoly leads to the foreign natural monopoly industry deregulation and the introduction of competition mechanism, the developed countries have being to reform government regulation in the natural monopoly industry since the 1980s, regulation reform has greatly promoted the development of the natural monopoly industry, achieved remarkable success and improved the level of social welfare. From the experience of government regulatory reform in the developed countries, they reform mainly through deregulation, privatization of property rights and introduction competition mechanism in non-monopoly business, and through stimulating regulation, price cap regulation in natural monopoly business.Meanwhile, governmental regulation of natural monopoly industry has also transformed from sate-monopoly during the period of the planned economy to modern governmental regulation under the market economy. Although reforms on Chinese governmental regulation of natural monopoly industries have made preliminary progresses, the governmental regulation system of natural monopoly industry keeps unchangeable. Traditional institutions of ministerial administration haven't made a fundamental transformation, which directly results in heavily inefficiency of governmental regulation. Chinese governmental regulation of natural monopoly industries in is of much more particularity and complexity because of its inner developing logic and the intertexture of administrative-dominant monopoly and various interests. The dissertation is to identify that "State as Homo economics"-state and governmental departments acting as interest principal part involving into economic activities, making and sharing profits contributes to the confusion between government and business, results in administrative monopoly and industry monopoly with regards to the field of governmental regulation of natural monopoly industries through the analysis of the conflict and misplace of governmental tri-agent, division of the relationship of trust-principal and co-conspiracy between government and business. "Government-business alliance" and administrative monopoly are just the reflection of inefficiency of governmental regulation of natural monopoly industry. However, the fundamental reason of inefficiency of governmental regulation of natural monopoly industries is due to the lack of the system of modern governmental regulation. The lack of institutions of property right, rule of law and developed law system is the institutional constraint of the development of the system of Chinese modern regulation. In particular, the lack of rule of law and institutions of property right leads to inefficiency of regulation and institutional dependency during the course of governmental regulation, which makes the reform on Chinese governmental regulation of natural monopolistic industry from top to bottom turn to the technical innovation and reform of industry from bottom to top. Behind the surface of misplace, offside and lack of governmental function, it shows the confusion of interest relations owing to the lack of rule of law and the ambiguity of property right.Through to the analysis of our government regulation question of natural monopoly industry and the reason of sickness, it's not difficult to discover that, the pattern suits our country natural monopoly industry regulation reform to be supposed to be "the middle regulation, two let loose" pattern, in addition, but also must finish the corresponding system preparation, namely consummate law system, establish independent regulation organization, establish public transparent decision-making procedure, advance property right system reform and so on..Chinese governmental regulation of natural monopoly is experiencing the transformation from ministerial administration of the planned economy to modern governmental regulation of market economy. It should and must go beyond "State as Homo economics" and turn to the modernization of governmental system of governance.