Study On Transaction Mode And Governance Mechanism Of China Vertical Trade Between Coal And Power Companies

Among the study of vertical trade,the trade between coal and power companies isquite typical.This essay,based on the great influence caused by the long-term conflictbetween coal and power companies,seeks for one reasonable kind of transaction modeand the governance mechanism.The theoretical analysis of transaction mode between coal and power companies isfrom two aspects,one is the equilibrium model of organization cost and dealfees,which discusses the equilibrium point and its dynamic change.the other one is thetransaction cost theory of Williamson,which discusses the different verticaltransaction mode under different circumstances.The study on vertical transaction mode of china coal and power companies is also inthis way.the conclusion is that we should adopt vertical integration.Given thisbackground,building one good governance mechanism in order to make thetransaction mode applicable and stable is quite necessary.This essay suggests twokinds governace mechanism,that is, reputation mechanism and partical equity stake ofthe other party.Finally,the essay gives some relative suggestions to make sure that the verticaltransaction between coal and power companies can get through smoothly.