Effective Competition And Industrial Policy

America economist J?M?Clark first put forward effective competition aiming at the unreality of perfect competition. Effective competition is an industrial organization form accompanied with large-scale production and vigor competition, as also as the core scopes of the theory of industrial organization and it is important to the formulating of industrial policy. The paper puts the indexes of effective competition in order on the basis of the SCP theory, and constructs a principal component analysis model.Firstly, the paper states the theory and feature of effective competition, which is importance to the development of industry; The theory of SCP and the relationship among structure, conduct and performance are depicted according to Chinese competitive situation, we also explore the relation between effective and structure conduct performance in large scale production and vigor competition.Secondly, although a lot of economists research effective competition on the basis of the theory of SCP, the weakness of the former researches is lack of effective competition indexes. The paper constructs the indexes on the basis of the former research and states the feature and advantage of the principal component analysis in the assessment at effective competition. We found principal component analysis is the perfect model to judge the effective competition.Then, we analyze the competitive conditions of our motor vehicles according to structure conduct and performance, then examine the results by principal component analysis model, we found the two kinds of analysis is equal. Which shows principal component analysis is the perfect model to judge the effective competition. Last we put forward some policy in order to improve motor development.Finally, we states foreign industrial organization policy, analyze the dualistic nature—administrative monopoly and excessive competition, last bring about the industrial policy: we should foster a market structure with effective competition.The paper's innovation point rests with: bring out the effective competition indexes, put forward the principal component analysis of effective competition, and analyze the automobile trade's competition.