Impact of resource reconfiguration on total factor productivity of service industry

Using the Chenery-Syrquin model, this paper investigates the effect of resources reallocation on the TFP of China’s service industry from 2003 to 2016.The main findings are as follows: there are significant structural changes in the production factor configuration of various industries within the service industry. The growth of service industry is still driven mainly by factor input. The resource reconfiguration effect has not yet become the main force driving the growth of TFP of the service industry. However, the structural dividend has become more and more obvious after 2008. The marginal production of capital in most service industries has reached a stage of total reduction and rapid convergence, and there is a convergence of marginal returns of capital within the service industry. The marginal production of labor in most service industries is on the stage of decrease in growth rate and increase in the total amount. Although the marginal production of labor still exhibits divergent characteristics, it has begun to show signs of convergence at the end of the study period. There are phenomena of “mismatching resources”, and the state control or monopoly industry is more serious. The government should improve the property rights system, expand openness, and formulate supporting policies to different industries to promote the optimal allocation of resources.

Monopoly

This chapter describes the theory of monopoly. In a monopoly market, there are many buyers and a single vendor of a good. The single vendor is called the monopoly. Buyers are assumed to be price takers, and their demand as a function of price is given, as in the case of perfect competition, by an aggregate demand function. One reason one might find a monopoly industry is because, while other companies can enter this industry, the monopoly acts in a way that forestalls potential competitors. If substitute products are produced and sold, they restrain the monopoly's market power by flattening and shifting-in the monopoly's demand curve. The idea of substitutes for a monopoly product comes up in another context — that of multigood monopolies. The chapter then looks at nonlinear pricing.