Evolutionary Game Analysis on the Government Regulation in Natural Monopoly Industry

Natural monopoly industry is an industry needs government regulation. This article set up a replicator dynamics model to explore the interaction between the government and interest group in the process of regulation in natural monopoly industry. The results show that: (1) A less efficient regulation will more likely be put into practice, and can not be changed easily under the intervention of the interest group in natural monopoly industry. (2) To deal with potential problems of interest group activity, government should adopt some form of regulation on interest groups.