Risk Aversion And State-owned Oligopoly Market Performance

Stricken by the financial crisis in 2008, in some important fields and industries, market concentration is raised all at once and the phenomenon of "state advanced and private retreats" appears. Differently, in order to raise efficiency, introduce the competitive system, and change the previous situation that one state-owned enterprise monopolizes the market, our country promotes the forming of a new pattern that several state-owned enterprises with nearly the same strength dominate the market together. According to this characteristic, these oligopoly enterprises are named as "state-owned oligopoly enterprises" and the market they monopolized "state-owned oligopoly market". Currently, in China's petroleum and natural gas extraction, tobacco processing, electricity generation and supply, gas and tap water production and supply, telecommunication and other industries, most of them are of oligopoly market structure.The competitive pattern, the improvement in level and innovated efficiency embodied in the oligopoly market structure make it outstanding in modern market economy. The raised market concentration in our country naturally promotes the forming of oligopoly market, however, oligopoly and insufficient vigor embodied in our oligopoly market goes against the theory of modern oligopoly market. As a result, researching on the discrepancies of oligopoly markets'characteristics between China and the West seems to be of practical significance.On the basis of this logic, specifying on risk aversion tendency, the writer researches on oligopoly market in this thesis. The writer analyzes the performance loss in China's oligopoly market from the aspects of both static and dynamic efficiency and proposes the policy suggestions. At first, the characteristics of our oligopoly market are revealed, and the performance and reason of risk aversion tendency in state-owned oligopoly market is selectively analyzed. Next, the production and price decisions of state-owned oligopoly enterprises when facing risks is analyzed from the aspects of cost risk and demand risk, with the conclusion that risk aversion tendency decreases the efficiency of resource allocation in state-owned oligopoly market, which is examined in the refined oil market in our petroleum industry. Then, the writer improves the model of "centipede game" in dynamic games of complete information, and uses it to describe the reduction functions of risk aversion tendency to R&D investment and the important functions of R&D investment to market dynamic efficiency. Consequently, the writer comes to the conclusion that risk aversion will reduce R&D investment in state-owned oligopoly market and cause a loss to dynamic efficiency. In the end, the writer concludes that risk aversion tendency reduces the static and dynamic efficiency at the same time in our state-owned oligopoly market and causes a performance loss to our state-owned oligopoly market.