The Industrial Organization Of The Chinese Telecommunications Industry And Changes

Chinese telecommunication industry has made substantial progress in the recent a decade years. China Unicorn's entrance the market in 1994 broke the monopoly in the industry. There have been numerous changes happened in the following ten years. Among them, the government's molding of the market structure and the competition among the telecommunication operation companies especially attracted the attentions.The rapid development of the telecommunication industry and the great change of its structure, however, haven't brought out the breakthrough of its theory. The theory study over the telecommunication still focuses on regulation. The studies over stimulation regulation and the ease-up of regulation are still bound by the theory of regulation. To Chinese telecommunication industry, it is true that regulation is still significant, the theory with regulation as its core, however, cannot adapt the change of telecommunication industry any more. Therefore, new theory should be adopted to explain and illuminate the development of Chinese telecommunication industry.The most important theory in the study over the specific industry is the industrial organization theory. The paradigm of "SCP" established by Harvard school of thought set the three dimensions over the industrial study of the market structure, the enterprise's behavior and the economic efficiency. "SCP", however, was established under the market-leading environment, so that directly transplant it to the telecommunication industry with regulation as it important ingredient cannot be cogent enough.As a result, this thesis is trying to merge the regulation theory and "SCP", so as to establish a theory framework of Government Regulation and SCP (R-SCP) to analyze the industry structure of Chinese telecommunication industry as well as its change. In this framework, regulation, structure and behavior are the endogenous variables in the industry development. Regulation affects the market structure, in converse, it also be affected by the structure, behavior and efficiency.Under the R-SCP, the primary factor to affect the change over Chinese telecommunication industry is government regulation. Through the ease-up of the regulation of entering and even strong-arm of division, the government can straightly make the market structure of the telecommunication industry. Meanwhile, the government can adopt some softer methods to adjust the market structure, such as theasymmetrical regulation over the new entrants, the 3G licenses issuing, which, however, could not bear fruit without the conduction of enterprise behavior. After the ease-up of the regulation, the behavior of the telecommunication enterprises became more important to the market structure especially during a certain period. The price strategy, the disparity strives and the capital market behavior and so on may play significant role in the market structure. Simultaneously, technical innovation will fundamentally change the industry margin and the construction so that affected intensely the market structure, since the speed of the technical innovation is extremely fast in the telecommunication industry.The factors that affect the behavior of Chinese telecommunication industry include government regulation, market structure, its exterior environment and so on. The telecommunication industry has an intense network effect; as a result, the enterprise's behavior plays a negative role in the market structure and economic effect under the regulation effect. The imbalance of the rights and duties of those leading industrial enterprises may arouse its challenge to the government regulation, which will result in either the breakthrough of regulation or its reinforcement. Under the market of oligopoly, the behavior of telecommunication enterprises present the obvious characteristic of game playing, which in distinct contrast with the ones under the market of monopoly or competition. In order to adapt the change of exterior environment, one after another, the telecommunication enterprises change their style to comprehensive information suppliers. Strictly, the telecommunication operation and the comprehensive information service are not the same industry, which may means both the beginning of the cycle of a new industry and the end of an old one.As to the efficiency, it is affected by the government regulation, enterprise behavior and the market structure. Those impacts can both be active and negative. The government, however, should assume more duties to the efficiency since it is responsible and capable to adjust the market structure and the enterprise behavior that arouse the efficiency cut. The key to solve this problem is to set down the criteria of the efficiency. Different from the developed countries of Europe and America, to the telecommunication industry in China, the static social welfare maximization cannot be the significant criteria of efficiency evaluation, the industrial competitive capability also make sense. Under the criteria of two-dimension, since China Unicom enter the telecommunication industry in 1994, the efficiency of Chinese telecommunication industry increase continuously in general. But some of the government regulation...