Does competition cause government decentralization? The case of state-owned enterprises

Dongmin Kong, Gaowen Kong, Shasha Liu and Ling Zhu

Journal of Comparative Economics, 2022, vol. 50, issue 4, 1103-1122

Abstract: This paper examines the causal effects of competition on governments’ incentives in decentralizing state-owned enterprises (SOEs). By using the shocks to product market competition caused by China's trade liberalization, we find that competition substantially improves SOEs’ decentralization. Furthermore, we also provide evidence of the incentive to exploit local information and roll out an alternative interpretation that government divests itself of SOEs because they become burdensome. Finally, we find that the effect of competition on decentralization is augmented when governments are geographically distant from their SOEs or when SOEs are located in regions characterized by low social trust, high dialect diversity, or heavy pressure for economic growth.

Keywords: Competition; Politics; Decentralization; State-owned enterprises; China (search for similar items in EconPapers)
JEL-codes: D2 F1 G3 H3 L2 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0147596722000385
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:50:y:2022:i:4:p:1103-1122

DOI: 10.1016/j.jce.2022.05.006

Access Statistics for this article

Journal of Comparative Economics is currently edited by D. Berkowitz and G. Roland

More articles in Journal of Comparative Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().