Reasonsforformation
Monopolycausedbymarginalcost
Asfortheformationofmarketmonopoly,averyimportantreasonisthatthemarginalcostisreduced,thatis,themoreusers,themoreoutputThebigger,thelowerthecost.Thepowergridhassuchcharacteristics.Youhavebuiltapowergrid,andeachadditionaluser,theloweritsaveragecost.Butwiththeadvancementoftechnology,thismonopolymaybebroken.Inthepast,powertransmissionreliedonlargepowergridsbecauseofitseconomiesofscaleandthelowpowergenerationcostsoflargepowerplants.However,manyadvancedsmallpowergenerationtechnologies(suchassmallgasturbinepowergeneration)haveemerged,whichhavelowpowergenerationcosts,lowlosses,andflexibleandconvenientuse.Asaresult,themonopolyadvantageoftheoriginallargepowerplantshasbeengraduallyweakened.
Technicalpatentscausemonopoly
Technicalpatentsmayalsocausemonopoly.Asyouallknow,thekeyboardweusenowiscalledtheQwertkeyboard(namedbytheletterkeysontheupperleft),anditskeyarrangementisunreasonable.Thisisbecausetheearlykeyboardsweremechanical,inordertoavoidtypingtoofast.Asaresultofmechanicalfailure,thekeyboarddesignerdeliberatelyarrangedthelettersunreasonablytoslowdownthetypingspeedofthetypist.Uptonow,thekeyboardhasnomechanicalproblems.Itstandstoreasonthatthespeedshouldbeasfastaspossible,buttheoriginalalphabeticalarrangementhasnotchanged.Thisisbecausetheoriginalkeyboardhasoccupiedtheabsolutemainstreamstatus,andpeoplehavecompletelyadaptedtoit.Itisverydifficulttopromotethenewkeyboardfromscratch.Thisistheso-calledpathdependence.Thatistosay,oncepeoplechooseacertainpathoftechnologicaldevelopmentandevolutionintheevolutionoftechnologyorsystem,theyarelikelytofollowthispath,anditisnoteasytojumptoanotherpath.Inotherwords,thereisnopathdependenceingameswherethemulti-stepselectioncanbe"shuffledover"ateachstep.Ifthechoicethistimedependsontheresultofthepreviousselection,pathdependenceoccurs.TakeMicrosoft'sWindowssoftwareasanexample,becauseitfirstoccupiedthemainstreammarketofpersonalcomputeroperatingsystems,itwillbedifficulttoreplaceitwithothersoftwareinthefuture.Asadeveloperofapplicationsoftware,Ihavetobecompatiblewithit.Asauser,IusedMicrosoftinthepast,andinordertousemoreapplicationsoftware,Ihavetocontinuetorelyonit.Suchmutualinfluence,intheend,itsdominanceisalmostimpossibletobeshakenbyothermanufacturers.Thisisbecauseofthemonopolycausedbypathdependence.
Financialsubsidiescausemonopoly
Financialsubsidiescanalsocausemonopoly.Forexample,governmentsinmanypartsofChinasubsidizeresidentialelectricityconsumption,resultingintoolowelectricityprices.Manypeopleboughtelectricheatingdevicesandusedsubsidizedelectricitypricestogetbenefits,whichcausedagreatwasteofresources.Energysubsidiescanalsocauseenvironmentaldamage.Weknowthatingeneral,energyusewillhaveanegativeimpactontheenvironment.Asasociety,itisawelfareloss,butthislosscannotbereflectedintheproductioncostoftheenterprise.Thissituationiscalledexternality.Theexternalityneedstobecorrectedbythegovernment.Themethodofcorrectionistoaddsociallossesasacostamortizationtothepriceofthecompany'sproducts.Otherwise,theenergyproductsproducedbythecompanyandthedamagetotheenvironmentwilldeviatefromtheoptimalequilibriumlevel.Therefore,inordertooptimizetheallocationofresourcesandreduceenvironmentalpollution,thegovernmentshouldnotonlyeliminatepricesubsidiesforenergy,butalsotrytointernalizetheexternalcostsofenterprises,thatis,toimposeenvironmentaltaxesonenergyuse.Itshouldbepointedoutthatinadditiontonegativeexternalities,therearealsopositiveexternalities,suchasraisingbeesandrunningeducation.Theseareexternalitiesthatdeserverecognitionandneedtobepromoted.Thegovernmentcanalsoimprovesocialwelfarebyrewardingcompanieswithpositiveexternalities.
Specialformsofmonopolyproducts
Therearemanyspecialformsofmonopolyproducts.Forexample,acertainkindofbookisunique,anditisalsoirreplaceableformanytouristattractions(suchastheForbiddenCity,thePyramid),andtheseareallmonopolyproducts.Monopolyproductsareirreplaceable,anditsdemandcurveisalsodownwardsloping.Therefore,inordertomaximizeprofits,monopolistswilladoptsomespecialmethods.Forexample,abooksellerwillsetahighpriceforanewbook,andfirstsellittoreaderswithhigherincome.Afterthesehigherincomereadersbuythebook,theproductisboundtobeunsalable.Atthistime,thebooksellercanlowerthepriceandsellthebook.Tothenextbatchofconsumers.Repeatedly,thepriceofbooksgraduallydropped,andintheend,booksellerssoldthebookstothelastbatchofconsumersataverylowmarginalcost.Inthisway,booksellerscansetpricesalongthedemandlineandturnconsumersurplusintoprofit.However,becausebooksoftenfacecompetitionfromsimilarproducts,andtheutilityofmanybookswillgraduallydecreaseovertime,theimplementationofthismethodmaynotbeeffective.
Exampleoverview
Aconsiderablenumberofcustomersareengagedinvarioustypesofliquidfoodorrelatedindustries,sotheyhavebeenpayingattentiontothedynamicsofthedomesticliquidfoodindustry.Inrecentmonths,IhaveseenadomesticpackagingcompanycontinuetousevariousmediatoaccuseTetraPak,apackagingcompanyfromSweden,thatitmonopolizesthedomesticasepticpaperpackagingmarket.Theauthorhasadifferentviewonthis.Firstofall,intermsofeconomiclaw,itisquestionablewhetherthisaccusationistenable.Theso-calledliquidasepticpaperpackagingcanonlyberegardedasaproductcategoryatbest,anditishardtosaythatitisanindependentmarket.Aseptictechnologycanactuallybeappliedtodifferentpackagingmaterials,suchasasepticplasticbagpackagingandasepticplasticbottlepackaging.Thesepackagingsarehighlyinterchangeable.Forconsumers,theycanchoosedifferentpackagingformsiftheywanttodrinkmilk,dependingontheirownpreferencesandhabits.Inotherwords,ifthesterilepaperpackagingdisappearsfromthemarket,itisnotabigdeal.Consumerscanstilldrinkmilkinglassbottlesandroofpacks.Forthesamereason,weobviouslycannotaccuseSantanaofmonopolizingthetaximarketjustbecausealltaxisinShanghaiuseSantana,becauseinalegalsense,itisdifficulttosaythattaxisconstituteanindependentmarket.
Accordingtotheanalysisofrelevantmarketresearchreports,asasupportingindustryofthefoodindustry,theliquidpackagingindustryhasshownfiercecompetitioninvariouspackagingformsinrecentyears.Generallyspeaking,itshouldbeanindustrywithrelativelysufficientcompetitionandrelativelylowentrybarriers.Infact,itisdifficultforanenterprisetoobtainamonopolyposition,anditisonlythroughtechnologicalinvestmentandbrandbuildingtostrengthenthecorecompetitivenessoftheenterprisetoimproveitsanti-competitiveability.
Inrecentyears,liquidfoodhasdevelopedrapidly,maintainingadouble-digitgrowthrateeveryyear.Asaresult,China'sliquidfoodpackagingindustryhasreachedanunprecedentedlevel.AllkindsofpackagingappearinChina'scitiesandruralareas.Asthemostintuitivebrandexpressionformofliquidfood,packagingshowsitsuniquepowerinthecommoditysociety.AccordingtoCanadeanConsulting,the7majorpackageshaveestablishedtheirrespectivemainstreampositionsinthefiercecompetition.Intermsofmarketshare,these7packagescanbedividedintothreelevels.1)PETplasticbottlesaccountingformorethan20%;2)ironcans,pasteurizedplasticbagsandasepticbrick-typepaperpackagingeachaccountingfor10%-20%;3)glassaccountingfor5%-9%eachBottles,secondarysterilizedplasticbottlesandsterileplasticbags.PETplasticbottleshavea28%marketsharebecausetheyareusedinmultiplebeveragecategories,includingteabeverages,fruitjuices,fruitjuicebeveragesandyogurtbeverages;otherpackagingisnotsowidelyused.
ItcanbeseenfromthisthatTetraPak’sdominantasepticbrick-typepaperpackagingitselfisonlyapartof10%to20%,nottomentionthatitisfacinganewstrongopponent.SuchasCombibloc,AeropackandotherChineseandforeignpackagingcompanies.Therefore,TetraPak’slifemaynotbeaseasyasimagined.TetraPakistheoriginatorofasepticpackagingtechnology.TheInstituteofFoodTechonologistscalledthistechnology"themostsignificantinventioninfoodsciencesincethe1950s."SinceTetraPakwonagoodmarketshareinChina,domesticcompanieshavecontinuedtoimitateorlearnfromit.However,duetothehighlevelofsafetyandtechnologyoftheasepticpackagingsystem,itisnoteasytogetstarted.Equipmentandwrappingpaperareactuallyfarfrombeingassimpleastherelationshipbetweenacameraandfilm.Foodcompaniesthathavehighrequirementsforqualityandsafetygenerallydaretotryproductsthatarenewtothemarket,andit'sreasonable.
Atpresent,thecompetitionofliquidfoodpackagingisacompetitionacrosspackagingtypes,anditisbecomingfierce.Observingthemarket,wecanseethat1)High-densitypolyethyleneplasticbottlesarecompetingfortheshareofyogurtinroof-typepaperpackaging;2)Asepticplasticbagssharetheshareofwhitemilkinasepticpillow-shapedpaperpackaging;3)PlasticbottlesaresharingTheshareofjuiceinasepticpaperpackaging;etc.TetraPakisabletomakeitscompetitorsintimidatedinsuchadynamiccompetition.Fromtheperspectiveofdoingbusiness,itshouldbesaidthatitisthesuccessofbuildingitsbrandandcorecompetitiveness.TetraPak'sleadingpositioninthefieldofasepticpaperpackagingismainlyduetoitssuperiorqualityandtechnologicalcapabilities,aswellasprofessionalbrandstrategy.Inaddition,itisworthmentioningthatTetraPakalsohasalarge-scalemarketingteamtoprovideitscustomerswithmarketstrategycounseling.Asanindustrialcompany,fewpackagingcompaniescanprovidesuchprofessionalandcomprehensivecustomerservice.
Theconceptofmarketmonopolyshouldnotbeabused.Thisaspectcaneasilybecomeapretextformutualattacksbetweenenterprisesandcauseendlesslawsuits.Moreimportantly,becauseChina’scurrentmarketsegmentationisstillverylow,andthetechnicalcontentofproductsisnothigh,iftheconceptofdominantpositionisabusedtoopposecompanieswithtechnologicaladvantages,itwillnotbeconducivetotheoveralleconomicdevelopment,anditwillpromotethecountry.Enterprisesintensifyscientificresearchtoparticipateinhealthymarketcompetition,whichhasanegativeimpact.Therefore,thetoppriorityforourdomesticenterprisesisnottoblamethestrongpositionofmultinationalcompanies,buttofindwaystodevelopnewtechnologies,tofindandoccupyblankareasinthemarket,andtospendmoreenergytostrengthenbrandbuildingandestablishthecorecompetitivenessofenterprises.
Formsofexpression
Operatorsabusetheirdominantpositioninthemarkettorestrictcompetition
Case:MuchuanCountyWaterSupplyandDrainageCompanyinSichuanProvincecompulsorycollectionofwaterbasefees.
ZhaoqingRailwayStationinGuangdongProvinceforcedcustomerstochargecustomersforextendedservicefeessuchasforkliftoperationfees,comprehensivedeliveryservicefees,warehousestorageandstoragefees,andsitestoragefees.
Comment:Accordingtothe"Anti-UnfairCompetitionLaw",monopolisticbehaviorsthatabuseadominantmarketpositionaredividedintotwocategories:oneisnaturalmonopoliessuchaswater,electricity,gas,heating,transportation,postal,telecommunications,etc.Themonopolisticbehaviorofenterprisesinthesexindustry;thesecondisthemonopolisticbehaviorofoperatorsthathaveamonopolyinaccordancewiththelaw(suchastobacco,salt,petroleum,petrochemicals,etc.).Themainmanifestationsofthemonopolisticbehaviorinvestigatedanddealtwithare:compulsorytransactions,compulsoryservices,differentialtreatment,tyingandadditionalunreasonableconditions,andexcessivefees.
Themonopolyagreementbetweenoperatorsrestrictscompetition
Case:WenzhouCity,ZhejiangProvince,theAdministrationofIndustryandCommercesignedaunifiedmarketpricefor7companiesengagedingasbusinessinthecity,basedontheTheProvincial"RegulationsonAnti-UnfairCompetition"conductedaninvestigationandhandling.
TheChongqingMunicipalAdministrationforIndustryandCommerceimposedrestrictionsonthethreeoxygenproductionandsalescompaniesinthecitythroughagreementstodividethemarket,unifyandraisetheoxygensalesprice.Afineof10,000yuanwasimposed.
Comment:Withthedeepeningofanti-monopolylawenforcementandtheaccumulationoflawenforcementexperience,theindustrialandcommercialdepartmentsofsomeprovinceshaveactivelyparticipatedinthepromotionoflocalRestrictedcompetitionbehaviorssuchasmarketdivisionandpricefixingthroughmonopolyagreementswereinvestigatedanddealtwith.Appropriatelegislativesupplementstolocalregulationshaveenabledtimelyinvestigationandpunishmentofnewmonopolyandrestrictivecompetitioncasesthathaveemergedinrecentyears,effectivemaintenanceofcompetitionorder,andnecessaryexpansionofthefieldofanti-monopolylawenforcement.
Administrativemonopolyrestrictscompetition
Case:JilinProvinceAdministrationforIndustryandCommerceissuedadocumentforacertaincity’sinformationofficeandotherfivedepartmentstodesignateacompanytomonopolizethecity’sinformationpipenetworkprojectconstructionandconstructionactivities,respectivelyAnadministrativesuggestionletterwasissuedtothemunicipalpeople’sgovernmentinaccordancewiththelaw,andtheabove-mentionedbehaviorwaseffectivelystoppedthroughlocalintervention.
FujianAdministrationforIndustryandCommerceissuedanadministrativeproposaltotheProvincialPublicSecurityDepartmentandproactivelycommunicatedandcoordinated,andpassedtheprovincialPublicSecurityDepartment’sInterventionhasstoppedtheabovebehavior.
Comment:Judgingfromthelawenforcementpracticeoftheindustrialandcommercialsector,theinvestigationandpunishmentofadministrativemonopolyrestrictingcompetitionisdividedintotwocategories:oneistheregionalblockadeandlocalprotectionofthelocalgovernment;theotheristhegovernment'sdepartment(publicsecurity,Transportation,civilaffairs,health,education,etc.)abuseofpowertorestrictcompetition.Inactuallawenforcement,theindustrialandcommercialdepartmentsactivelyadoptedadministrativesuggestionsoradministrativeadmonitionstostopalargenumberofadministrativemonopolies.
Harmfulness
AsetoffiguresreleasedbytheStateAdministrationforIndustryandCommerceofChinashowedthattherewere31.6millionindividualindustrialandcommercialhouseholdsinthecountryin1999,whichhaddroppedto25.057,000bytheendofJune2006.Thenumberofindividualindustrialandcommercialhouseholdsdecreasedbyabout6.5million,anaverageof870,000householdsperyear(ChinaYouthDaily,September18).Regardingtheevaporationofmillionsofself-employedpeople,the2006BlueBookofPrivateEconomybelievesthatthecostofstartingabusinessforself-employedbusinessesistoohigh,1/3ofthetax,and2/3ofthefee.
Indeed,feesaregreaterthantaxes,andthefeessqueezeouttaxes,makingself-employedpeopleoverwhelmedandunbearable,sothattheyhaveclosedtheirdoorsandclosedtheiraccounts.Asanauthoritativesurveyshows,somelocalprivateenterprisesneedtopayasmanyas375fees,includinghandlingfeesforgoingoutbusiness,industrialandcommercialyearbooks,invoicesettlementfees,municipaldeposits,andcomputerbillcosts.
Whileacknowledgingthatthenumberofself-employedindividualshasdroppedsharplyduetotheoutrageouscostofstartingabusiness,monopolyisalsoanacceleratorforthedisappearanceofmillionsofself-employedindividuals,anditisthechiefculpritthatstiflestheindividualeconomy.
Thetheoryofmarketeconomytellsusthatthemainbodyofthemarketeconomyshouldbediversified.Themoremainbodiesofcompetition,themorevigorousandvigorousthemarketeconomy.Atpresent,whetheritisadevelopedWesterncountryoradevelopingcountry,theindividualeconomyismostlyontherise.Thenumberofsmallandmedium-sizedenterprisesin21APECcountriesandregionsaccountedfor97%to99.7%oftheirtotalenterprises,employmentaccountedfor55%to78%,GDPaccountedformorethan50%,andtotalexportsaccountedfor40%to60%.IntheUnitedStates,SiliconValleyisalmostallsmallandmedium-sizedenterprises,andthegovernmentcallsthem"thebackboneoftheAmericaneconomy."Foranotherexample,thenumberofsoleproprietorshipsintheUKhasincreasedforthreeconsecutiveyears.Thenumberofemployeescurrentlyemployedbysmallandmedium-sizedenterprisesaccountsfor58.7%ofthetotal,andoperatingincomeaccountsfor51.1%oftotaloperatingincome.
Thisrealityistrulyamazing.BoththeUnitedStatesandtheUnitedKingdombelongtoveterancapitalism,wheremonopolyorganizationswerethefirstcountriestoappear,butnowtheyfocusonthedevelopmentofindividualeconomiesandregardtheindividualeconomyastheengineofeconomicgrowth,thusdrivingtheentireeconomytodevelopinahealthydirection.Ontheotherhand,inChina,self-employedbusinessesareshrinkingdaybyday,whilemonopolisticenterprisesarethrivinganddominate.Forexample,lookingattherecentlyreleasedlistofChina'stop100taxpayersin2006,itisnotdifficulttofindthatthetoptenonthelisthasbeenoccupiedbymonopolyindustriessuchasoil,tobacco,andelectricityforseveralyears.Inaddition,theprofitsofstate-ownedmonopoliesaccountforhalfofthecountry’stotalcorporateprofits.
Theindividualisweakandthemonopolyisstrong.Onthesurface,itseemsthatthereisnotmuchconnection.However,alittleanalysiswillmakeitclearthatwithpowerfulmonopoliesoccupyingmoreandmoremarketshares,wouldn'tthelivingspaceofsmallbusinessesbesqueezedandexcluded?Moreover,domesticmonopoliesarenotformedonthebasisoffullcompetition,butare"deformedchildren"bornfromthemarriageofadministrativepowerandstatecapital.Itisconceivablewhatkindoffairandharmoniouscompetitionatmospherecanbecreatedbymonopolyunderthisbackground.Therefore,theauthorbelievesthatwhilewearecleaningupvariousunreasonablefeesforself-employedindividuals,weneedtodomoretobreakthemonopolyindustry.
Currentsituation
Theanti-monopolylawpassedbyavoteontheafternoonofAugust30,2007atthe29thmeetingoftheStandingCommitteeoftheTenthNationalPeople’sCongressofChinawillstartonAugust1nextyear.Implement.ItsintroductionisanimportantmilestoneintheadvancementofChina'smarketeconomy.Itwilleffectivelyprotectthelegitimaterightsandinterestsofconsumersandbecomealegalweapontoprotecttheorderoffaircompetitioninthemarket.
Competitionisthesoulandbasiclawofamarketeconomy,butthemarketitselfcannotguaranteethefreedomandfairnessofcompetition.Althoughthereweresomeanti-monopolyprovisionsinsomeChineselawsandadministrativeregulationsbefore,theseprovisionswerenotcomprehensiveandnotsystematicenough,andthepenaltiesformonopolisticbehaviorwereuneven.
Duetothelackofanti-monopolylaw,theperformanceofmonopolyinthecurrenteconomiclifeofourcountryisoutstanding:economicmonopolycharacterizedbyagreementstofixprices,limitoutput,dividethemarketandabuseofmarketdominancehasbeenrepeatedlybanned.,Somefieldsandindustriesuseadministrativepowertoformmonopoliesthroughmarketmethodsfromtimetotime.
Insomecountries,monopolisticbehaviorthatrestrictscompetitionisconsideredaseriouscrime.Becausethebiggestdrawbackofmonopolyisthatitdisruptstheruleofsurvivalofthefittestinthemarket.Asmallnumberofcompaniescancontrolproductionandthemarketbyvirtueoftheirstrongeconomicpower,andrestrictcompetitionincertainmarketareas.Thiswillnotonlyaffectthenormalcompetitionamongoperatorsanddamagethelegitimaterightsandinterestsofconsumers,butalsodestroyresources.Optimalallocationofmarketoperatingmechanismswillultimatelyrestraintheimpetusforeconomicdevelopment.
Today,inmaturemarketeconomycountries,theanti-monopolylawhasbecomethebasiclegalsystemofthecountry.Insomecountries,thislawoccupiesthecorepositionoftheeconomiclawsystem.AtthecurrentstageofthedevelopmentofChina'smarketeconomy,itisurgenttoestablishalawtoopposemonopolyandprotectcompetition.Becauseifthecompetitionmechanismisdestroyed,thenthemarketeconomywillbeoutofthequestion.
Inthisnewly-bornlaw,morethan50legalclausesconcentrateonthreetypesofbehaviorsincludingmonopolyagreements,abuseofmarketdominance,andconcentrationofoperatorsthatexistinlargenumbersinthecurrentsociety.Administrativemonopoliesthatabuseadministrativepowertoeliminateandrestrictcompetitionareregulatedtoeffectivelypreventtheuseofadministrativepowertoobliteratemarketcompetition.
Ofcourse,thepromulgationofalawcannotsolvealltheproblemsinthemarketorder.Theestablishmentandmaintenanceofafair,competitive,andorderlymarketorderrequiresthejointeffortsofmarketentities.