The Theory Of Natural Monopoly Regulatory Programs

In recent years, Chinese begin to research the problem of regulating the industry of natural monopoly. As a special field in Chinese economy, the industry of natural monopoly is managed by the manner of nationalization interior regulation all the times. Owing to the particularity of the industry of natural monopoly, in long terms reformations don't touch the field deeply. In recent twenty years, with the rapid development and progress of technology and productivity level, the original part in the industry of natural monopoly that has natural monopoly factor is decreasing gradually, the former method of interior regulations can't meet the new demands of regulations. People are puzzled about whether it is necessary to regulate the industry of natural monopoly and how to choose exterior economy regulatory scheme, which accelerate the further development of regulatory theory and give birth to this paper. People begin to look after the balance between increasing the interior efficiency and promoting the resource collocating efficiency. The advancement of foreign regulatory theory and regulatory practice push the regulatory reformation of the natural monopoly industry in China.The paper doesn't put emphases on the research of nationalization interior regulations, deregulations in the economic regulatory theory and social regulations (such as environment protection). The paper put the emphasis on the choice of the econ'omic regulatory scheme, namely the choice between the low power regulatory scheme and the high power regulatory scheme.The paper is based on the theory of cost-benefit comparison in the analysis. The paper lays stress on the problem of information asymmetry, regulatory capture, rent seeking, regulatory lag, subsidy cost, product qualities and safeties. The paper analyzes the cost and benefit of regulation by the analytical method, in order to make more clear the differences and relations between the low power regulatory scheme and the high power regulatory scheme. During comparing the regulatory cost and benefit, the paper analyses the problem from two kinds of angles. The firstone is from the angle of the consumer's benefit by the analytical methods of Zhicaoyi. The second one is from angle of welfare economics by the methods of Stigler. They both value the regulatory cost and benefit. The analytical results of the two angles are consistent.The creative place of the paper can be sum up the three. First, in the fifth part of the second section, "the cost and benefit of low power regulatory scheme", the paper considers there is more loss in all-social welfare than what Zhicaoyi deems. The loss should be added to another triangle efficiency loss of resource collocation. Secondly, in the forth part of the third section, "the regulatory cost of high power regulatory scheme", the Loeb and Magat model should be corrected, the paper advanced a method that parameter X should be joined into the model, which will make the model more perfect. Thirdly, in the forth part, "the comparison between the high power regulatory scheme and low power one", the paper designs a new model in order to make a choice between pricing according to average cost and marginal cost.The paper analyzes the choice of regulatory scheme theoretically. However in these analyses the producer surplus and consumer surplus and so on are only feelings of people's psychology, they are hard to be calculated. So the theoretical analysis just offers a kind of theoretical frame and guidance. It is important to transfer the feelings of person's psychology into the amount that can be observed in the practice. And it is also important to transfer appropriately. The problem needs to be explored and practiced in the practice with combing the situation of China.