A Study On Industrial Organization Rationalization Problem Of China's Auto Industry

The development of China auto industry is behind many strong countries, because it has weak foudation and lacks primary technique. There are many unreasonable places in its organization and its competition power must improve. It is long distance that China auto industry become the pillar industry in national economy so as to push contry modernlization accelerating.The paper studys three important elements which influence industrial organization: market concentration, barriers to entry, merger & reorganization. And discusses how to optimize industry organization and enhance competition power aiming at existing problems.We do emprical analysis on factors which possibly influence market concentration of China auto industry using econometric method. Market volume growth rate, MES & industry policies have positive impact on market concentration.We established Coumot model to analyze the relationship between barriers to entry & enterprises'choices to enter into different market. The conclusion is that potential enterprises choose rest with cost barrier and competition status. Barriers to entry are classified as economic barriers and regulation barriers in China auto industry. In fact, since top grade market has high threshold, potential enterprises often enter into low-end market.The profitability and social welfare of horizontal merger are studied based on linear demand and asymmetric constant marginal costs of production in generalized Stackelberg market. The conclusion is that leading(following) enterprises seldom merge while one leading enterprise and one following enterprise often merge. After joining WTO, China auto industry kept quick merger & reorganization steps. The cases took on two traits: merger relied on foreign capital and Three Top Group played leading roles. However, many problems harassed China auto industry. Therefore, it didn't exhibit strong competition power, so much as some enterprises gave decision power to foreign partner passively.Which is the right road for China auto industry ? How does it become strong auto country ? First of all, we should establish stratege that we not only open our auto market, but also research on primary technique of whole auto manufacture. Creating top grade auto grands of our country to let the wholeworld know our auto grand. And encouraging to constitute large scale auto groups. The government must change its function, that means dinimishing regulation barriers and setting up reasonable exit mechanism.