The Performance Of China Telecom Industry

From the early1990s, China Telecom Industry, which has developed into pillar industry of the national economy today, has continued to breaking monopoly and drawing into competition of the reform. Although reform has made significant achievements in the last20years, we still see clearly that lots of problems still exist.This paper first introduces the background and article ideas, and then traditional industrial organization theory SCP (structure-conduct-performance) analytical framework, which is used to analyze the factors that affect the efficiency of China Telecom Industry. Then adopting5stochastic frontier models, which are Fixed Effect Model, Random Effect Model, Pooled Model, True Random Effect Model and True Random Effect with Mundlak Adjustment Model, we measure the cost efficiency of China’s telecom industry by using the panel data consisting of30province administrative regions from2002to2008. The empirical findings show that China telecom industry may not be typically nature monopolized and the positive impact of network size on total cost is significant. However, the efficiency level of China telecom industry still needs to be improved.