Economic Analysis of Administrative Monopoly and Its Solution

Administrative monopoly in China is analyzed with microeconomics tools such as rent-seeking theory, comparative advantage theory and game theory. A rent seeking model is given to study administrative monopoly. Futhermore, the authors propose that the barriers brought by administrative monopoly not only increase consumers burden, but also make enterprises run with high cost and low efficiency, and optimal resource distribution can not be done. Administrative monopoly can not be eliminated unless administrative monopoly is regulated within anti-monopoly law and its legal liability is enhanced, which is proved with game theory. In order to solve administrative monopoly, China should construct a law system concluding anti-monopoly law and administrative law as a reinforce.