Price distortion on market resource allocation efficiency: A DID analysis based on national-level big data comprehensive pilot zones

Weijiang Song, Mengyang Zhao and Juan Yu

International Review of Economics & Finance, 2025, vol. 102, issue C

Abstract: This study employs panel data from 284 cities in China from 2014 to 2020 and applies a two-way fixed effects model. The results confirm that price distortion significantly hinder the efficiency of resource allocation. A difference-in-differences (DID) analysis of the implementation of national big data comprehensive experimental zones reveals that the establishment of these zones effectively mitigated the inefficiencies in resource allocation caused by price distortion. Furthermore, heterogeneity analysis shows that the role of the price mechanism in improving resource allocation efficiency is particularly pronounced in central and eastern regions. Further analysis finds that price distortion primarily lead to inefficiencies through government intervention, market monopolies, and information asymmetry. Meanwhile, technological support help reduce the marginal effects of resource misallocation. Which highlights the role of policy interventions and technological innovation in correcting market failures and enhancing economic efficiency, providing empirical support for relevant policy making.

Keywords: Price distortion; Resource allocation efficiency; National-level big data comprehensive pilot zones; DID model (search for similar items in EconPapers)
JEL-codes: D24 D47 L51 R11 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:102:y:2025:i:c:s1059056025002916

DOI: 10.1016/j.iref.2025.104128

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