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| Research on the Optimal Governance Strategy with Capital Constraint and Market Competition under “Stall Economy” |
| SHEN Bin，CAO Yifan，DONG Ciwei |
| 1. Donghua University, Shanghai, China; 2.Zhongnan University of Economics and Law, Wuhan, China |
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Abstract “Stall economy” is one of the important approaches to stabilize the economy and ensure employment. The government’s guidance is crucial for the development and encouragement of “stall economy”. The Cournot model is used to capture the characteristics of the market environment in which many vendors with capital constraints sell homogenized products, and the operational decisions of vendors under different governmental governance modes and the choice of optimal governance modes when facing different governance goals are discussed in this study. The results show that: ① if the government aims at maximizing the total profit of all street vendors or maximizing social welfare, the level of administrative cost is a crucial factor to influence the governance strategy; ② if the government aims at maximizing the total sales volume of the market, the capital restriction of street vendors becomes the main consideration factor in mode selection; ③ if the government aims at maximizing consumer welfare, the mode selection depends not only on the administrative cost but also on the capital constraint of the street vendor.
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Received: 03 April 2021
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