A Study On Vertical Structure,Resource Misallocation And Industrial Policy In The Open Economy

After the reform of state-owned enterprises in the 1990 s,China's domestic market gradually formed a competitive pattern of vertical distribution of different ownership enterprises and different market structures in upstream and downstream industries.In 2015,the “Guiding Opinions on Deepening the Reform of State-Owned Enterprises” issued by the CPC Central Committee and State Council divided state-owned enterprises into commercial and public welfare categories,emphasizing the classification and promoting the reform of state-owned enterprises.However,the classification reform mainly focuses on the reform of different types of state-owned enterprises through the introduction of competition mechanism or the realization of equity diversification.It does not pay attention to the vertical competition structure of asymmetric distribution of different ownership enterprises formed in the reform process,which may have impact on the reform goals.At the same time,since the report of the 19 th National Congress clearly stated that“the development of a higher-level open economy”,economists have continued and heated discussions on whether the government should implement industrial policies and trade liberalization policies.Different scholars have evaluated the effects of industrial policy and trade liberalization policies from different aspects.However,few literatures are based on the asymmetric market competition structure formed by China's specific different ownership enterprises,and explore the impact of industrial policies and trade policies on resource allocation efficiency.Under the closed framework,by constructing a general equilibrium model of “vertical structure” of which the upstream state-owned enterprises act as oligopoly and the downstream private enterprises monopolistic competition,from the perspective of the number of enterprises entering the downstream market,it is found that the “vertical structure” has a negative impact on the resource allocation efficiency;Further,this paper incorporates China's current “interaction subsidy” policy into the “vertical structure” model,and concludes that this industrial policy has deteriorated the efficiency of resource allocation.Furthermore,this paper expands it into an open economy model and finds that the resource misallocation still hold under vertical structure,and it will increase the distortion of resource misallocation when the “interaction subsidy” policy is included.Finally,under the closed conditions,this paper proposes one polic,they are “upstreamtaxation,downstream subsidies” and increased trade liberalization,respectively,which can not only minimize resource misallocation,but also improve social welfare.The structure of this paper is as follows: First,the first part of the article is an introduction,which mainly introduces the research background,research significance,research methods,structural arrangement,research innovation and research deficiencies.The first chapter is literature review,including the enterprise competition structure,the literature on industrial policy and the impact of trade liberalization on resource misallocation.The second chapter is the theoretical mechanism of vertical structure affecting resource misallocation under closed conditions.Based on the existing literature,it is judged that the Chinese enterprise competition structure is of a vertical structure.On this basis,we explore whether the vertical structure itself misplaces resources.The third chapter is the theoretical mechanism of vertical structure and industrial policy affecting resource misallocation under closed conditions.According to the existing literature,we will sort out China's current industrial policies and explore the changing trend of resource misallocation after the inclusion of current industrial policies.The fourth chapter is the theoretical mechanism of vertical structure affecting resource misallocation under open conditions,which extend the model in second chapter model to an open situation,and the degree of influence of vertical structure on resource misallocation under open conditions is investigated.The fifth chapter is the theoretical mechanism of how vertical structure and resource misallocation affect industrial policy under open conditions,which expands the model in the third chapter to an open situation,and explores whether the inclusion of industrial policy after the implementation of trade liberalization can correct the misallocation induced by vertical structure under closed conditions.The sixth chapter concerns the optimal policy choice.Under the closed conditions,the industrial policy is proposed to correct resource misallocation caused by the vertical structure and improve social welfare.Finally,we get the concluding remarks from the results appeared in this paper.At the same time,we come up with proposals to correct the resource misallocation and improve the social welfare.