The Study Of The Formation Mechanism Of Excessive Competition And The Regulatory Governance Response

In the latest years, with the transition of our country's economy from Shortage economy to Surplus economy, there are lots of cases of excessive competition. At the same time, the phrase of "excessive competition" frequently appears on the all kinds of medias. Under the market structure of excessive competition, most of plants in the industry get the profit under the average level and cannot easily withdraw from this industry, so that the social resources cannot be collocated effectively. However, in the classical economics textbooks, there is no depiction to the excessive competition at all. So it is essential and significant to research the work mechanism of the excessive competition for the healthy development of country's economy. The main intent of this essay is to get the full knowledge about the excessive competition and then raise countermeasures to prevent and cure the excessive competition.The author of this essay takes for the excessive competition as follows from the economics point of view: for the plants that take profit-maximization as their objects, because of the surplus supply in the industry, which is generally from the excessive entrance to the industry and the strategic behaviours of the plants in the industry, they are facing severe competition from the other plants in the industry. As soon as the great majority of the plants in the industry are manufacturing under the total cost, but the plants in the industry cannot or are unwilling to withdraw from the industry, the excessive competition will come into being. So the excessive competition is a kind of deadlock or equilibrium. This essay divides the excessive competition into two kinds, one is the excessive-entrance excessive competition, and another is the excessive competition caused by the strategic behaviours of the plants in the industry. As tothe excessive-entrance excessive competition, this essay adopts the revised non-entrance Cournot model to define the optimum plant number that the industry can hold, and then on the basis of the basic assumption of insufficient information, the author adopts the revised Cournot model that allows the new plants enter the industry to describe the forming process of the excessive entrance to the industry, and then this essay adopts the revised Betrend model, which there is no output limit, to explain the mechanism of excessive-entrance excessive competition. As for the excessive competition that is caused by the strategic behaviours of the plants in the industry, because there is too much strategic behaviours for the plants to apply, so this essay just choose the excessive competitions that are caused by the plant's pursuit to scale economy and the plant's advertisement strategies to research. The research indicates that the rational intention to realize the scale economy and advertisement strategies of the individual plant in the industry will result in the surplus commodity and surplus advertisements. So that under the circumstance that the commodities manufactured by the industry is homogenous and the condition of high retreat barriers, the excessive competition will be likely to emerge. How to prevention and cure to the excessive competition, on the basis of the said analysis, the author thinks, need the mutual effort of government and plants. Government needs to optimise the entrance barriers, minify the retreat barriers, develop the asset market further, and offer aids to the plants in the excessive competition industry; the plants in the excessive competition industry should place their eyes on the long-term profits, be cautious to enter brand-new industries to them and do comprehensive investigation when they invest in a new industry that they never have any experience.The main works of this essay are as follows: apply the relevant industrial economics theories to research the process of plants' excessive-entrance to certain industry and the phenomena of excessive-competition that is caused by plants' excessive-entrance to a certain industry. Apply the relevant industrial economics theori...