Studies On The High Income In Monopoly Industries Of China: An Interest Group Perspective

In recent years, the comprehensive capability of China has been strengthened and the living standard of people has been improved substantially. New leadership of the Communist Party of China has declared clearly that the government must attach more importance to people's livelihood, and must unite all people to struggle for the goal to construct the socialist harmonious society. However, with the rapid development of China's economy, there exist great differences among people's income, especially the growing gap in industrial income. Furthermore, the gap between people who engaged in monopoly industry and others is obviously noticeable. High income of monopoly industries has aroused widespread concern in academic circles.Western interest group theory provides us a new way to research on political and economic problems; it indicates that interest group plays an important role in political market. Although China's political regime is different from that of western countries, our social stratum has been divided into different part and some interest groups occurred. The income reform is just a process of interest competing and coordination for different interest groups. In all, this paper pointed out that the problem of income is a political and economic issue. Based on the theory of monopoly, income distribution and interest groups, this paper tries to study the problem of high income in monopoly industries from the perspective of new political economy.Firstly, the paper contrasts industry income, states that income of monopoly industry is so high, and the proportion of revenue handed to the state is so low. It divide people involved in this issue to 4 groups, according to the definition of interest groups:those are monopolists, consumers, non-monopolists, and regulators。Secondly, the paper analyses targets, members and political activities for every single groups using methodological individualism:monopolist group is quite small, though its members are very large which have little divergence and have good relationship with regulators, and as a result, it has special political status; consumer group is very large, but its members are scattered, the incentive for each individual to make political effort is serious deficiency; non-monopolist group's influence is weak for its each member has great divergence, and it could be divided to some small groups easily, it's difficult for these members of this group to form an unified action; the regulation group has the target to cut off the high income of monopoly industries, but in certain period un-distinction between governments and enterprises still exists, governors always take sides to monopolist for their own interests. All in all, the paper points out that the wide gap between the strength of consumers and monopolists enhance the monopolists'power to pricing their products or services, and the indifference of non-monopolists, the ambiguous of regulators all lead to the results for monopolist gaining high monopoly profits and sustaining high income.Finally, based on game analysis for those interest groups in the processing of income distribution reform, the paper included that as long as the political influence of monopolist group is stronger than that of consumer group and non-monopolist group, the result of the game is monopolist gain more profits. Further more, monopoly enterprises and government have the tendency to form alliances. Therefore high income of monopoly industries is the game result among various interest groups. In order to promote the reform process, the gap of political influence between monopolist group and consumer group, non-monopolist group must be reduced, and the relationship between monopoly enterprises and the government must be changed. At the last, this paper brings up some suggestions on regulating high income of monopoly industry. These suggestions includes the supporting the union of consumers and consumers'association, non-monopolists'expressing their demands actively, establishing an incentive regulation mechanism for monopolists, supervising regulators'own behavior and utilize the third distribution to balance income gap. After all, the most important is that government should balance all interest for every interest group, and ease their relations. This paper looks forward that one day we could build up a relatively reasonable income distribution system and all people walk towards a livelihood of common prosperity.