Research On Reasons And Welfare Of Market Segmentation

Since the introduction of the policies of reform and opening-up and with the gradual establishment of a socialist market economic system, economy of China has been developed rapidly. Accompany with the economic system of our country reform gradual thorough, the government is also showing its influence in the region economy reform and presents lots of new characters during this process. This article aims to analyze market segmentation, which is one form of administrative monopoly, from the view of Economics. Market segmentation block the free interflow of production elements, resulting in many problems, such as the limitation of free competition etc. Concerning about this problem, we have to pay more attention on breaking up local protectionism, promoting production elements to interflow freely, and establishing market integration on the base of keeping local economic development under the situation of lots of policy issued by central authority before didn't work for this problem.This article is divided into four parts. The first part introduces the concept of market segmentation as well as its behavior and influence. The second part hold the view that there are many reasons to cause market segmentation, such as fiscal decentralization, industrial structure, region interests and imperfect laws and statutes. The third parts analyze the welfare loss caused by market segmentation. Finally, this article discusses how to cancel bad influence of local administrative monopoly. Firstly, because local government has not ability to solve this problem by itself, we have to take into account both overall interests and local interests and redefine the function of local government. Secondly, single measure won't work, so we have to further promote the reform, improve the socialist legal system, and change mechanism of performance appraisal on the base of overall statue.