The Rent Dissipation And Contest Control

Contest is a process,in which the participants compete for a reward with irrecovered cost. Contest is a typical phenomenon in the social, political and economic affairs, playing an important role in the incentive and the allocation of resources. In terms of the effect,the rent dissipation and contest control have become the core problems of the contest theory. Aviation airlines contest about the scarce resources, such as the routes, cabotage, and flight schedules, caused the rent dissipation. So, it becomes very necessary to research the degree and effect of the government intervention and the measures of contest control.With the rapid development of social economy and the continuous improvement of people living standard,the aviation industry gradually becomes the fastest developing and the biggest potential traffic transportation means. After being regulated by laxative-or-tight government policies several times, the market structure of our civil aviation has changed from state monopoly into monopolistic competition. Aviation airlines contest for the scarce resources,such as the routes,cabotage and flight schedules.Because the competition involves different benefit bodies, which have their own autonomy of economic interests and different interest demands, the game between each other finally changed into contest chain. Among them, the pursuit of their own benefit maximization makes the administrative monopoly of industries and airlines' limited individual rationality more prominent. Based on the overview of contest theory, this paper analyses the forming process of our civil aviation contest in two aspects:administrative monopoly and exchange economy.In Public Choice Analysis, in order to promote the development of the economy, the government mobilizes the enterprises to pursue their benefit maximization to organize the production to response the country macroeconomic control, by using the special preferential policies and the scarcity of resources. This process generates a "rent", which is used by the government to achieve the purpose of macroeconomic regulation. This paper takes contest as a kind of seeking this "rent". The contest is divided into productive contest and unproductive contest, according to the different reaction of the participants in the contest. In order to guarantee the passengers safety and avoid the vicious contest of airlines, CAA(Civil Aviation Administration) put forward the policy about the examination and approval for the air routes. In this process, productive and unproductive contest appear, basing on the different reactions. This paper analyses the influence on the industry productivity and social welfare by the contest. We found that the unproductive contest produced the rent dissipation, which has negative effects on the industry productivity and social welfare.Based on CSF model,this paper analysis the impact of civil aviation contest on the industry productivity and social welfare. We find that unproductive competition lead to the appear of rent dissipation,which has negative effects to the industry productivity and social welfare.For the industry productivity, whether you can obtain the resources depends on the cost of the unproductive contest,the airlines with high productivity will get less resources than the low ones. Strict control makes the productivity of civil aviation lower,protects the airline with low efficiency to a certain extent.To the social welfare,the bigger the expected revenue of participants to the scarce resources, the cost of unproductive contest, the social welfare loss is greater.For the view of the aviation control effect, this paper gets some countermeasures enlightenment as follows. Independence supervision mechanism is a kind of more favorable way to control the unproductive contest in the aviation industry,to reduce the directly or indirectly benefit sharing between the regulators and airlines, and to guarantee the smooth carrying out these policies and forming better market competitive order.Attract the relevant government department and airlines to carry out the civil aviation administration policy by using effective incentive mechanism in positive and negative aspects.Increase the surveillance dynamics with information disclosure, reporting and other methods to change the information asymmetry between the CAA and airlinesNarrow the range of control, weaken the strength of the administrative monopoly, and find a balance between promoting contest and preventing unfair contest.Change the resources allocation mechanism, make the best use of the resources,such as the routes,cabotage and flight schedules,change the industry contest into productive contest,improve the productivity and increase the social welfare.