From regulation to deregulation in Chinese telecommunications market: A case survey of Xiaolingtong

Xiaolingtong, a quasi mobile phone based on PHS technology, had undergone a process from the government´s regulation to the deregulation in China. This paper intends to adopt a dynamic game method to explain the process of Xiaolingtong´s walking out from the government´s regulation in China. It is showed that the total social welfare would be maximized by the government´s deregulation policy at the beginning if the market was in efficiency itself, while any regulating activity would be inefficient and be eventually given up for the social objective as well as the market efficiency. It is implied that the regulated firm should reject the regulation boldly only if knowing the regulation being inefficient because the rational government must concede in that condition. The results may serve for the government to make its regulation strategies correctly in future.