A Legal Study On The Issues Of Franchise About Water Market

As the water industry infrastructure with a large investment, long cycle, significant economies of scale, technology and other technical-economic characteristics, in the water industry also there is a coexistence of natural monopoly characteristics and non-natural monopoly characteristics. Therefore, there is a typical of market failure in the water market where should operate by the government-led invest. However, in actual operation in the water industry exposed many problems, so people have to consider the reform of the water industry to adapt to economic and social development.In the process of market-oriented, franchise business model may be the best choice. On the one hand the franchise model can be selected to compete in water industry sectors, limited in competition, and also can get rid of the existing monopoly defects, to distinct between the economies of scale and competition range, to achieve effective competition and promote the healthy development of the water industry; the other hand, can make the water industry under the government’s macro-control, more efficient absorption and utilization of private capital to ease the financial pressure to address the constraints of shortage of funds the development of water industry. But since the implementation of the reform of the franchise system in China’s water industry, there is still a lot of problems. Building the franchise in water industry is due to the issue of rights and obligations of parties. but short of systems about franchise in water industry, laws and regulations regulate to the water industry operating characteristics in place.The existing specifications for the water utility franchise can only be scattered all kinds of regulations, government regulations, and therefore rights and obligations of the parties ambiguity, lack of government commitment and government supervision, etc. can be seen in franchise in the water industry.In order to promote the reform of China’s water industry, to introduce the market competition mechanism to adapt to the water industry development. First of all we must to improve the system of franchise system, clear the responsibility of the Government, and establish the effective supervision and management institutions. There is no doubt about the importance of the construction of water utility franchise system.