Based On The Properties Of Natural Monopoly Regulation Logic

The concept of Natural Monopoly in economics has been developed over a hundred years. Development of the theory has a major impact on the formulation of government policy, especially Natural Monopolies cover most of the public utilities, which are closely linked with people’s lives. The concept of Natural Monopoly is gradually mature and improved, because it changed from the early development of certain industries only describing the phenomenon to a more rigorous economic characteristics. Subadditivity is a major development of the theory of Natural Monopoly, this concept has been overturned the traditional view on the Natural Monopoly, making the sufficient condition for Natural Monopoly more rigorous universal. However, Subadditivity is still an obscure and difficult concept to prove. It can’t meet the actual needs of the proof, making the theoretical concepts and reality detachment. When the industry is difficult to define the concept, which influenced the development of government policies, regulatory research on natural monopoly industry is even more difficult.This thesis adopts the way of a combination of theoretical and empirical methods, re-examine the sufficient condition for the Natural Monopoly. Given the economies of scale are not sufficient conditions for Natural Monopoly all under the conditions of diseconomies of Scope, this thesis have proved that the economies of scale and economies of scope exist is the sufficient condition for Natural Monopoly, which simplify the certification process in the actual proof. After proving the presence of the economies of scale and economies of scope in China’s telecommunications industry by econometrics, government should follow the method of regulating the Natural Monopoly industry. To solve the problem of many companies coexistence in the Natural Monopoly industries in today’s society, we proposed regulation policy recommendations from the perspective of efficiency.This thesis takes the China’s telecommunications industry as an example and intends to solve the government’s difficult about defining the Natural Monopoly industries and regulatory policy choices. We hope this will form a complete set of attributes based on Natural Monopoly regulation logic which can be helpful to solve practical problems.