Excessive Competition (Economic Analysis and Governance)

Author: Luo Yunhui
Publisher:
Publish Date: 2004-10-01
Features: The purpose of this book is to scientifically define "excessive competition" and prove its theoretical existence under the conditions of a market economy. Based on this, it explains the reasons for excessive competition in China's economy in recent years and derives policy recommendations for addressing it. The book is divided into five chapters. Chapter 1 distinguishes "excessive competition" from the "depression" or "recession" of the economic cycle. Building on an analysis and evaluation of existing concepts of "excessive competition," the book proposes a renewed understanding of the term: excessive competition refers to the behavior of market participants, under the constraints of certain competition criteria—game rules and other limitations—to maximize their specific utility functions through competition, while engaging in competitive actions that contradict the fundamental interests of the nominal entities they represent. The research methodology of the book strictly follows the foundational methods of neoclassical economics, focusing on the limitations of specific problems. At a lower level of methodology, it employs new industrial organization theory based on game theory, property rights economics, and emerging classical economics to explore the mechanisms of specific equilibriums such as excessive competition and potential solutions. Chapter 2 argues for the possibility and specific conditions of excessive competition under a market economy. Chapter 3 explains the reasons for excessive competition in China's economy, with the interaction mechanism between basic property rights systems and excessive competition as the central focus of analysis. In this chapter, it first derives the concept of common property from queuing, and analyzes the relationship between the public and the common, linking China's excessive competition to Hardin's "tragedy of the commons," which becomes the fundamental basis for explaining it. Building on this, it adopts the form of an existing model but assigns it different connotations, analyzing how the merger barriers of state-owned enterprises catalyze excessive competition. Following the explanation of economies of specialization and transaction costs. The empirical part of Chapter 4 selects a representative case study. Chapter 5, when proposing policy recommendations, avoids unrealistic and unfounded speculation based on ideal states, instead applying the general equilibrium approach to assume that "rational actors" are present in every decision-making entity, including policymakers. In conclusion, the book's basic findings are that excessive competition still has the potential to exist under a free-market economy, and the recent widespread issue of excessive competition in China's economy primarily stems from its property rights system, which serves as the competition rules in China's economy. Similarly, addressing this phenomenon also requires starting from these specific limitations.