The allocation of entrepreneurial efforts in a rent-seeking society: Evidence from China

Zhiqiang Dong (), Xiahai Wei and Yongjing Zhang ()

Journal of Comparative Economics, 2016, vol. 44, issue 2, 353-371

Abstract: This paper considers four types of entrepreneurial efforts: productive activities, aggressive rent seeking, defense against rent extraction, and leisure. It examines how entrepreneurs allocate efforts when facing dual-dealing relationships with politicians in a rent-seeking society: entrepreneurs not only pursue additional benefits through rent seeking, but also try to avoid extortions by politicians. Using unique city-level and firm-level data across China, we demonstrate that Chinese entrepreneurs survive in a twisted world: ordinary entrepreneurs would desire better institutional environment, but if institutional improvement is not available, they would prefer political connections which are often preoccupied by special interest groups and/or large-sized firms.

Keywords: Entrepreneurship; Rent extraction; Rent seeking (search for similar items in EconPapers)
JEL-codes: D72 L26 P26 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:44:y:2016:i:2:p:353-371

DOI: 10.1016/j.jce.2015.02.004

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