A Study On FDI Of Natural Monopoly Industry And Its Effect In China

As one of the countries that joined the WTO,China made a commitment to the world that it would gradually relax the rules and regulations of telecommunications and other industries within a certain period of time in the "WTO accession" agreement,and allow foreign businessmen to enter these fields.This decision led to a large number of Foreign Direct Investment（hereinafter referred to as FDI）into the domestic natural monopoly industries.The entry of these FDIs has brought about technological advances and economic scale growth in the related business of natural monopoly industries,but it also brought potential risks and put forward higher requirements for the regulation reform of natural monopoly industries.In this context,this paper studies the following issues.First,the economic characteristics of natural monopoly industries and the mechanism of the impact of the introduction of FDI on natural monopoly industries.Second,the analysis of technological spillover effects of the introduction of FDI on natural monopoly industries.Third,the analysis of the resource allocation effect of the introduction of FDI on natural monopoly industries.Fourth,the analysis of the competitive effects of the introduction of FDI on natural monopoly industries.This paper first theoretically analyzes the path of natural monopoly industries to introduce FDI,and the mechanism that affects natural monopoly industries after the introduction of FDI.Then the paper selects the A-share listed companies of transportation,warehousing,post office,power,heat,gas and water production and supply industries,information transmission,information technology service industry,culture,sports and entertainment industry in monopoly industries from 2008 to2017 as the test samples.Finally,the paper empirically analyzes the different effects of the introduction of FDI on the natural monopoly industry,and analyzes the economic significance behind the empirical results,and gives the corresponding national macro-control strategies and corporate micro-management measures.First of all,different economists have different views on the economic and technological characteristics of natural monopoly industries.But on the whole,the natural monopoly industry mainly has the economic characteristics of scale economy,weak cost increase,maintainability and network,and these characteristics are gradually developing.And the introduction of FDI has the biggest impact on the natural monopoly industry is the economic characteristic of weak increase in cost.Therefore,the research on the formation and change of the natural monopoly industry boundary is based on the weak increase of costs from the demand market and the cost structure market.After research,this paper finds that both the changes in the demand market and the change in cost structure affect the boundaries of natural monopoly industries through their cost curve and market efficiency.At the same time,the impact of market demand and cost structure on the natural monopoly boundary is not isolated.On the contrary,they are complementary and interrelated,and they together dynamically affect the boundary of natural monopoly.Then,this paper analyzes the impact of the introduction of FDI on the natural monopoly boundary,and considers that FDI,as a competitive factor in the natural monopoly industry,also affects the boundary of the natural monopoly industry through changes in market demand and changes in cost structure.It leads to the formation of a duopoly state between FDI and the enterprises in the original natural monopoly industry,which has a dynamic impact on the boundaries of natural monopolies.For the technological spillover effect of the introduction of FDI on natural monopoly industries,empirical tests have shown that foreign direct investment has a border economic effect on China’s monopoly industries,and there are different border effects,the spillover effects of different monopoly industries are not the same.Studies have shown,for the information transmission,information technology service industry and culture,sports and entertainment industries,the injection of foreign direct investment has negatively affected the technical efficiency of the corresponding industry companies.When domestic and foreign-funded enterprises are almost the same,the technological efficiency spillovers brought by foreign-funded enterprises will not play an active role.When the technological gap between domestic and foreign-funded enterprises is too large,due to the low absorption capacity of domestic-funded enterprises,it is likely that they will not be able to absorb the technical efficiency spillovers brought by foreign-funded enterprises and have a negative effect.When the technological advantage between the foreign-funded enterprise and the host country enterprise is not obvious,that is,the technical efficiency level between the foreign-funded enterprise and the host country enterprise is small,foreign-funded enterprises will tend to adopt various security measures to prevent technology spillovers in order to maintain their own technological monopoly advantages.At present,the market mechanism of such industries is not sound enough,and the market environment for fair competition is not particularly perfect.Unfair competition will severely limit the transfer and spillover of technology.In addition,factors such as low technical level and lagging high-tech development will also affect technology spillover effects.Strengthening the construction of market economy,promoting fair competition,and eliminating monopoly from the source are the top priorities for solving this problem.For the transportation,warehousing,postal industry and power,heat,gas and water production and supply industries,the injection of foreign direct investment has made the technical efficiency of the corresponding industry companies positive.But for the transportation,warehousing,and postal industries,the positive promotion is not obvious.Therefore,the transportation,warehousing,and postal industries need to continuously improve their ability to digest and absorb foreign technology.The technological R＆D capabilities of the host country（region）itself determine the size of its FDI technology spillover effects.By increasing R＆D investment and narrowing the technological gap with foreign-invested enterprises,we can promote the spillover effects of FDI technology in transportation,warehousing and postal industries.When the technology of domestic and foreign-funded enterprises has a certain gap,for this kind of monopolistic enterprises,the technological gap between domestic and foreign-funded enterprises is greater,and the possibility and space for domestic enterprises to obtain FDI technology efficiency spillovers are larger,so for the power,heat,gas and water production and supply industries,it is not surprising that the technology gap is positively correlated with the technical efficiency spillover.In the study of the effect of the introduction of FDI on the resource allocation effect of natural monopoly industries,empirical evidence shows that the injection of FDI can suppress the information asymmetry of the parties to the contract,thereby avoiding the adverse selection of the management and the problem of agency,reduce investment risk and decision uncertainty for external investors,enable them to trust and accept the accounting information of the enterprise,thereby reducing the financing cost of the enterprise,and enabling listed companies to obtain the best investment capital and opportunities at the lowest cost.FDI effectively increases the resource allocation effect of monopoly industries.The input of foreign direct investment can not only affect the investment decisions of external investors,but also affect the investment decisions of internal management of listed companies on different projects.The efficiency of resource allocation is from the micro perspective,to explore the efficiency of resource allocation of each enterprise in the capital market,that is,the investment efficiency of the enterprise.As an investment decision maker of an enterprise,the management of an enterprise will choose different management behaviors for different conflicts of interest,resulting in inefficient investment and ultimately reducing the efficiency of the company’s resource allocation.On the contrary,the injection of foreign direct investment can not only affect the investment decisions of external investors,but also affect the investment decisions of internal management of listed companies on different projects,thereby avoiding the adverse selection and agency problems of management,reduce the investment risk and decision uncertainty of external investors,make them trust and accept the accounting information of the enterprise,thereby reducing the financing cost of the enterprise,and enable listed companies to obtain the best investment capital and opportunities at the lowest cost.In the analysis of the impact of the introduction of FDI on the competitive effects of natural monopoly industries,for the culture,sports and entertainment industry,information transmission,and information technology service industries,the input of foreign capital has no obvious impact on the performance of the monopoly industry.But for transportation,warehousing,postal services,and power,heat,gas,and water production and supply,the entry of FDI has enhanced the effective competitive advantage of this monopolistic industry,and it is particularly obvious.Therefore,for some monopoly industries,FDI does not affect its competitive effect;for some monopoly industries,FDI has a positive effect on its competitive effect.Therefore,the entry of FDI to improve the effective competitive advantages of monopoly industries is particularly obvious,especially for transportation,warehousing,postal services,and power,heat,gas and water production and supply industries that require advanced technology.However,for some monopoly industries,such as the culture,sports,and entertainment industries,such monopolistic enterprises do not rely significantly on technology,and there is little difference between domestic and foreign companies,the competitive advantages brought by foreign-funded enterprises cannot play a positive role,and it is likely that the input of foreign-invested enterprises has no obvious impact on the performance of the monopoly industry.Finally,under the background of the Chinese government actively promoting the introduction of foreign investment and the further deepening reform of the original monopoly enterprises in China,this paper puts forward relevant policy suggestions from the macro and micro levels respectively.At the level of national macro-control,we can further refine the natural monopoly by improving the resource allocation effect of the monopoly industry and optimizing the market competition environment At the micro level of enterprises,all natural monopoly enterprises should constantly improve the modern enterprise system,show their management ability and level,shoulder social responsibility,establish good reputation,and enhance the competitiveness of enterprises.In addition,we should effectively stimulate the catfish role of FDI,promote monopoly enterprises to find deficiencies and shortcomings in the competition,and strive for the acceptance and support of government departments with excellent strength and good social impact.