Research On The Cyclic Overcapacity Under China's Subsidy Competition—Theoretical And Empirical Analysis

Since the Reform and Opening,China's economic has achieved remarkable achievements.While the material has greatly enriched the needs of the people,the issue of overcapacity has also begun to appear on the production of enterprises.From the 1990s,scholars in China generally believe that there are three large-scale overcapacity surges.This problem has aroused great attention from the government and the academia.In 2015,at the highest level of the CEWC,diminishing capacity was taken as the top of five tasks.At present,the study of overcapacity in the Chinese academic is based on the government's perspective.It is believed that the overcapacity in China is rooted in institutional factors.Based on reviewing the concept of overcapacity and overcapacity factors,this paper proposes to explore the interaction mechanism between institutional overcapacity and cyclical overcapacity,and use theoretical and empirical data to analyze it.,so as to investigate how government intervention and changes in the economic cycle to affected overcapacity.Based on the analysis of the mixed oligopoly models and empirical data,the main conclusions are as follows:(1)Both institutional and cyclical factors will cause overcapacity;(2)Overcapacity presents a pro-cyclical character.When the economy prospers,the capacity utilization rate increases,and the degree of overcapacity will decline.(3)Government intervention has a significant negative correlation with capacity utilization.As government intervention strengthens,overcapacity levels increase.This empirical result is consistent with the conclusion of institutional overcapacity proposed by many domestic scholars.The innovation of this paper lies in the combination of cyclical and institutional factors.This paper introduces cyclical factors into the mixed oligopolistic model,and use comparative static analysis to examine how the economic cycle affects the overcapacity.Also it uses the panel data to measure the capacity utilization rate and break down the institutional and periodic factors.