Analysis On The Economics Of The Organizational Model Of Industrial Chains Under Monopoly Conditions

With China's entry into WTO, it is confronting increasingly competitive pressure from foreign companies. By analyzing the competition trend in the world market, we can conclude that multinational companies are gradually strengthening the vertical integration and consequently competition , under such circumstance, how to effectively organize and manage the industrial chain has become a important factor that influences the competitive ability of the enterprise.As far as economics is concerned, the problem of industrial chain has been raised for a long time. Coase firstly investigated it and indicated that the border of enterprise is determined by the transaction cost internal and external. Afterward there are many distinguished economists who show an interest on the problem of the enterprise's border along the path that Coase created. Presently, the mainstream view shows that the organizational model of the industrial chain of the enterprise is mainly determined by the transaction cost. No doubt, the impact that the transaction cost have on the organizational model of the industrial chain of the enterprise is very vital, but it is improper to consider it as a exclusive factor. The biggest problem in the transaction cost theory lies in that it simply supposes the industry structure as a given while it did not account of the influence that the difference of the industrial structure imposes on the organizational model of the industrial chain. To resolve the problem, the paper begins with an analytical framework by the combination of both industrial structure and transaction cost. It applies the mathematical model to explain how the change of the structural industry influences the organizational model of the industrial chain.in terms of product's difference; as to the product of greater elasticity, the greater products differ, the more possible the enterprise adopt the vertical integration to organize the enterprise's industrial chain; on the contrary, the less products differ, the more possible the enterprise take two-part pricing policy to organize the enterprise's industrial chain. As to the product of less elasticity, the greater the product differs, the enterprise is inclined to adopting two-part pricing. On the contrary, the less the product differs, the enterprise is more likely to employ the vertical integration.From the angle of entry barrier, when the enterprise is subjected to the pricing competition: within the valid period 'n' of the fixed cost, the organizational model of the industrial chain of the enterprise relies on the size of the fixed cost. The greater the fixed cost, the more likely the enterprise is to integrate vertically to organize theenterprise's industrial chain; reversely, it tends to use the two-part pricing method. When the enterprise is exposed to the quantity competition, as the output of the fixed cost is within a certain scope, reigning enterprises will enhance the productivity through increasing the capital accumulation in order to hold back the potential entrants. It implies that the enterprise would choose vertical integration to organize the industrial chain. If the fixed cost is beyond the scope, because of the huge cost of preventing the potential entrants, the reigning enterprises may allow the potential competitor to enter. It means that the enterprises would use the two-part pricing method to organize the industrial chain.Finally, the paper empirically testify the conclusion deduced by the case study on the variance of the organizational model of the CNPC's industrial chain.