On the afternoon of May 14th, 2021, the last session of “The Economic Way Thinking” Lecturer Series was held at Conference Room 205 of the Central Main Building, with the theme of “Antitrust and Effective Government Regulation”. The event was delivered by Prof. Wang Yong, Tenured Associate Professor of the School of Social Sciences, Tsinghua University to doctorate candidates of Institute for International and Area Studies, Tsinghua University (IIAS-THU), and was hosted by Yang Chongsheng, Assistant Research Professor at IIAS.
At the beginning of the lecture, Prof. Wang pointed out that in real world, when we use the market to run resources, there will be risks of market failure, because the pricing mechanism cannot realize the optimal allocation of resources and there is a lack of efficiency. Meanwhile, the pricing mechanism cannot realize the rational allocation of resources either and there is a lack of fairness.
He mentioned that in daily life, when it comes to market, we often think of the monopoly of enterprises. However, in fact, we should reconsider and think over monopoly from a new perspective, which leads to the question of how to allocate public resources. In real life, some of the resources are allocated by the public sector, which isn’t in full compliance with the laws of the market.
Prof. Wang further stressed that opposing the disorderly expansion of capital involves two questions. The first question is: How should we allocate public resources? And the second question is: In the process of resource allocation, what role should business executives play?
He believed that the market is a mechanism for allocating resources, but in some cases, the market cannot solely accomplish the effective allocation of resources because of its ineffectiveness. During transactions, there is information asymmetry, which may lead to reverse elimination.
Prof. Wang stressed that the government plays an important role in market economics. Take China’s highway network as an example. It is obvious that the government plays an irreplaceable role in providing infrastructure services. Today, China’s logistics costs have dropped sharply, not only because of the quick and extensive development of expressways, but also because of the safety and security services provided by the government.
In the second part of the lecture, Prof. Wang explained that from an economic point of view, the successful business models in China can be classified into two categories. One is similar to Pinduoduo, and the other is close to Atlantis. He claimed that the government may sometimes create more problems than it solves, so it still calls for entrepreneurship.
Prof. Wang further stressed that in the past, public goods were provided by the government, which were invested, produced and implemented by the government. However, it was subsequently found that the best way was for the government to acquire from the private sector, which could minimize the cost of providing public goods and services by the government, which only needs to issue licenses.
At the end of the lecture, Prof. Wang concluded that the economic way of thinking is valuable in all aspects of real life, ranging from individual decision-making to government policies, which will play its role at different levels and help us make better decisions. In his presentation, Prof. Wang used extensive and vivid real-world cases, which highly inspired the audience.
Prof. Wang Yong is Tenured Associate Professor of the Institute of Economics at the School of Social Sciences, Tsinghua University and Member of the Academic Committee of IIAS-THU. Prof. Wang holds a PhD from Guanghua School of Management of Peking University and served as a postdoctoral fellow at Department of Economics of Harvard University. He was appointed as Deputy Director of the Institute of Economics at Tsinghua University in 2012 and further served as Executive Vice President of the Institute of Minsheng Economic Research at Tsinghua University. His research interest covers game theory and its applications, theories of Internet economy and enterprises and park economy.
Text by: Wang Zijing
Typesetting by: Wang Zijing
Reviewed by: Yang Chongsheng
