Natural Monopoly of Industry and Government Industry Regulation

Natural monopoly theory,as one of the government industry regulation theory bases,has been criticized by the regulatory capture theory,economic regulation theory and public choice theory which were restricted by bounded rationality.This paper points out that these criticisms have revolved round the question of government choice behaviors and at the same time touched upon the restriction problem of government bounded rationality.Based on the phenomena of natural monopoly and corresponding theories,this paper gives a summary comment on the theoretical basis of government industry regulation in natural monopoly theory.On the basis of reviewing the interrelationship between natural monopoly and industry regulation,the author gives some understanding on attributes of government choice behaviors and analyses the problem of bounded rationality restriction that happens when government carries out the industry regulation towards natural monopoly industry.