Structural Reform Of Natural Monopoly Industries In China And Legal Regulation

In the natural monopoly industries, because of the market environment oreconomic or technical characteristics of the industries, a business enterprise canalone supply a kind of or various products or service to the requirement of allpurchasers with the cost lower than two or more than two business enterprises. Inother words, the most efficient method of production and organization in thosenatural monopoly industries is a single manufacturer's "exclusive management".Generally speaking, the natural monopoly industries have the distinct economiesof scale, subadditivity, and nonsustainability.At present, the reform of regulations system at different degree in thenatural monopoly industries has become the common characteristic of theeconomic development in the whole world. In recent years, China also startsgradually to carry on a series of reform in the natural monopoly industries, suchas telecommunication, electric industries, railroad, aviation and running watersupply...etc.. Under this background, reasonably arranging and exercising thereform of regulations system in china's natural monopoly industries have beenone of the main portions of Chinese economic reform. At the same time, theanti-monopoly law that is relevant to the regulations system in natural monopolyindustries should also be adjusted and changed. Currently, China is drawing upthe anti-monopoly law. So how to select suitable approach to establish theanti-monopoly rules in the natural monopoly industries for the govemment,which should respond to the demand of the reform in those industries, is one ofthe most elements in building the system of the anti-monopoly law. This is alsothe goal of the article.The article totally consists of four chapters:The first chapter, entitled by the definition of the natural monopolyindustries, has discussed network, the obvious economies of scale or scope orsequence, subadditivity, nonsustainability and other related problems in thoseindustries. Thus, the chapter is the initiation of the whole article as a cushion forlater chapters.The second chapter has mainly discussed the reason of the regulations reform in china's natural monopoly industries. The business enterprises whichhave originally existed in the industries have various irregularities, such as anefficiency lowly, invest shortage, lack of competition vitality and not to carry outpublic benefits...etc.. Moreover, the natural monopoly industries oneself wouldchange along with the progress of science or technology and the variety ofdemand of those markets. The reform of regulations system in western nationswhich has important influence on china is also chief reason. So the chapter isalso well preparing for continuous argument in later chapters.The third chapter is the primal part of article and has mainly discussedeffective approaches to the reform of regulations system in China's naturalmonopoly industries. In order to practice the regulation reform and establish thecompetition mechanism, at first, the government should restructure the marketsand separate longitudinally or horizontally the dominant enterprises in the naturalmonopoly industries for a short time. Then, the privatization of the naturalmonopoly industries is necessary for the administrators to encourage privateenterprises to enter into the industries. There are many effective approaches tothe privatization, the most frequent forms of which are finance in the capitalmarket, franchise bidding, BOT, joint venture, encouraging private enterprises toenter, sell some state-owned enterprises in competitive sections, mixed forms,and so on. Therefore, it is essential for the government to choose the effectiveforms to carry out the privatization in the natural monopoly industries accordingto the economic or technical characteristics of those industries. Certainly, in theregulations system, the related law roles that consist of regulation of property orcompanies are necessary.The fourth chapter is a similarly textual point. The section closely behindpreceding paragraphs has elaborated further that after the reform in China'snatural monopoly industries, how to restructure the regulations system in thoseindustries. The regulations system mainly has two greatly part of, one is thedifferentiated regulation among different kinds of businesses, and the other iscoordinated policies in different businesses or enterprises. Thus, entry regulation,price level or structure regulation, coordinated price, coordinated competition,network regulation and universal service are the foundation of it. Certainly, these two greatly parts of rules don't have obvious boundary. However, they play anessential role in the reform in China's natural monopoly industries. Therefore,the purpose of regulating or weakening regulation is to make the market in thoseindustries more competitive but not to abolish completely those limits. Moreover,the contents of choosing the mode of establishing the anti-monopoly law at thefoot of the states in China, building up authoritative organization to governvalidly monopoly behavior of those enterprises in the natural monopolyindustries and drawing up the reasonable and effective anti-monopoly rules arcdoubtlessly the end step of the article.