The Path Of Solving The Problem Of Excessive Competition Of China's Coal Industry

Energy is basic and premises of the social development, there various kinds of energy such as:natural gas, coal, petroleum, hydropower, nuclear power and wind power, etc. Every country formulates different energy development strategy, according to the amount of reserve and the difficult of developing and using them. Coal resources are richest energy in our country, the reserve of coal resources in China is 1.145 trillion tons at the end of 2008, which rank second in the world lower than American. Every year the consumption of coal as primary energy is maintain about 70%, electric, steel, construction and chemical industry are the four major coal consuming industry; it is predict that the future demand for coal will not change too much, so it is our country's main energy. And reasonable exploitation and using coal resources, good competition and development among coal industry is basic of assuring country's energy demand, is premise of steadily developing and making progress of national economy.When our found our country, we carry out planned economic policy, due to blindness and lag of the planned economic, it was hard to develop economic, and also confined enterprise to develop, but our government was eager to develop, so the basic industry-price of coal industry is made too low, which made the coal industry was develop in the unreasonable mechanism. Coal mine in the small village are madly developing in the unique production condition, exploit coal resources, casing extreme wastage of resources. The concentration of the four company of coal industry has been always below than 10%, and the eight company is below than 13%, but the production of coal mines in small villages soared to 43.04%, which nearly occupy half of market share, the phenomenon of excessive competition in coal industry is obviously. From 1998, government begins to regulate coal industry, Merger, acquisition and restructure appears among coal Enterprises, shut up some illegal operating coal mains, the number of coal mine and the wastage rate of coal. Large coal enterprises such as:Shenhue and Tongmei, coal production is increasing every year. But the market share of our coal industry is still relative low, so regulating coal industry and searching for effective market for industry is the basic of development of coal industry, effective and reasonable using resources and development of our country's economy.But in market economic, the effective competition is formed based on selection mechanism of inter-industry, the "invisible hand" of market economy is the basis of economic development, but market economy is not perfect, it failures in the market which exist externalities, public goods, monopolies and so on, which need the "visible hand" of government to regulate. So Government's macro-control and the market adjustment mechanism is necessary for the economic development, mechanisms regulating the market economy need government policies at the macro level to give a legal and policy protection. So in the condition of lag and imperfection economic of coal industry, if want to solve the excessive competition and disorder situation, government needs intervene coal industry moderately, though the policy of "Guanjinyachan" can decrease the number of coal mines, and even can ease the excessive competition of coal industry, but it can hard avoid these closed coal mines re-product again. So perfecting market mechanism is basic, therefore the market mechanism of "law of the jungle" can fully play, then increase the industry concentration, reach the scale of industry economic, decrease the number of coal mines and well develop coal industry. though the policy of "Guanjinyachan" can decrease the number of coal mines, and even can ease the excessive competition of coal industry, but it can hard avoid these closed coal mines re-product again. So perfecting market mechanism is basic, therefore the market mechanism of "law of the jungle" can fully play, then increase the industry concentration, reach the scale of industry economic, decrease the number of coal mines.So this paper versify that our country go though the situation of excessive competition by using four index:industry concentration, company scale, Capacity utilization and industry profit margins and also versify that government regulation bring coal industry development and classify industry competitive situation in theoretical, but compare with America, industry concentration is still low, and competitive marketing structure of coal industry is still not changed, the proportion of coal mine in small villages in still 40%, then-the paper find the reasons of causing excessive competition of coal industry, and the main reason is the surgeon of small coal mines, so close this small coal mines is basic of solving excessive competition, so this paper verify the policy of "Guanchanyajin" is defect by using game theory. The interest of central government and local government is inconsistent, local government have the pressure of developing economy and even get rent-seeking, so making small mines reproduce. And then verify that the policy is hard to solve the problem of excessive competition in coal industry by using the regulation result since 1998. In conclusion, found the better way of developing coal industry which is market self-regulation mechanism, in the light of the successful process of American coal industry under the free market economy, put forward some recommendations of perfecting our coal industry market and developing industry effectively.