Pre-regulation As A Method To Boost The Transformation Of The Way Of Economic Development

Pre-regulation is such a practice that regulatory agency set an execution date behind the announcement date when it announce a new regulation policy, so as for firm to have enough time to accommodate the shock on its production and guarantee the effectiveness of regulation policy. This thesis find the prerequisites of pre-regulation, point out that according to the need of transformation of economic development pre-regulation is an available method to boost the transformation of firm's production process. I only consider the application of pre-regulation in technology upgrading and resource consumption reduction.Combining firm's rational expectation and adjustment cost in the changing of production process, I introduce the time variable into the regulation and review the regulation process from dynamic perspective. Mathematic model is built to describe the interaction of pre-regulation and firm's adjustment. When government use pre-regulation to guide the firm to upgrading technology or improving quality, firm will actively upgrade technology or improve product quality at the policy announcement date until complying the policy requirement at the execution date. When government declares to raise resource price in some future date, cost minimizing firm will reduce the resource consumption. Under the pressure of pre-regulation oligopolistic homogeneous firm will finish the cost-reducing-technology-upgrading at the same time. While heterogeneous firm will postpone the accomplish time as its adjustment cost goes up. The social optimal accomplish time depends on the parameter of demand and adjustment cost.