The Effect Of Incentive Regulations With Different Intensity On Total Factor Productivity In Chinese Telecommunications Industry

Since the 1970 s,new regulatory reform on flexible regulatory theory and incentive regulatory theory is becoming very popular in developed countries.It has been proven that a better market performance is generated by high-intensity incentive regulations.Incentive regulations,including price cap regulation and profit sharing regulation,are introduced in Chinese telecommunications industry at the beginning of the 21 st century due to a lot of regulation failure coming from the traditional regulation pricing mechanism.Therefore,it is meaningful to study the effect of incentive regulations with different intensity in different regions of the Chinese telecommunications industry from 2001 to 2013.Firstly,on the base of summarizing the theory of the effect of on total factor productivity(TFP),the theory on the principal-agent from game theory and the information economics and transaction cost from institutional economics are given.Then the pricing mechanism on the incentive regulations with different intensity and the "ISCP" theoretical analysis framework are discussed in this paper,and further different types on incentive regulations with different intensity are explored.With the tool of DEA-Malmquist index,the TFP is calculated from different regions and different periods in Chinese telecommunications industry.Regulation composite price index,which is proved significantly from a theoretical perspective,is used to measure the Intensity of the incentive regulations.In addition,Chinese provincial dynamic panel data from 2001 to 2013 are used to analyze the effect of incentive regulations with different intensity on TFP in Chinese telecommunications industry,using SYS-GMM,DIF-GMM,POSL,PE to empirically test the relationship between incentive regulations and TFP.It comes to the following results: From the national level,incentive regulation with different intensity plays a very significant role in promoting the growth of the telecommunications industry's TFP in the short-term,but it affects little in the long term.From the view of the east,central and western regions,incentive regulation with different intensity have positive effects on the intensity of telecommunications industry's TFP in the eastern and western regions,while the effect in the central region is reversed.From a different intensity of incentive regulation of view,low-intensity and intermediate-intensity of incentive regulation promote the eastern telecommunications industry's TFP,while negative effect on the high-intensity incentive regulation.Intermediate-intensity and high-intensity of incentive regulation promote the central and western telecommunications industry's TFP,while negative effect on the low-intensity incentive regulationTherefore,this paper proposes some policy suggestions on regulation reforms in Chinese telecommunications industry about the design of variable incentive regulationpricing mechanism,the establishment of incentive regulation monitoring and evaluating mechanism and the reinforcement of a multi-level and comprehensive incentive regulation service evaluation index.