Monopoly behavior of China’s manufacturing enterprises

Guidong Wang

China Political Economy, 2019, vol. 2, issue 1, 157-179

Abstract: Purpose - With the increase of state capital, corporate total factor productivity (TFP) has a tendency to jump up at first and then slowly decrease. Generally, no significant “productivity paradox” can be observed in China’s manufacturing industry. With the increase of export density, corporate TFP also shows a trend of initial jump growth and subsequent slow decline. This paper aims to discuss these issues. Design/methodology/approach - Using the 1996–2013 China Industrial Enterprise Database, this paper studies the monopolistic behavior of Chinese manufacturing enterprises through the measurement of TFP and corporate monopoly power. Findings - Results show that China’s manufacturing monopoly enterprises are generally innovation-oriented rather than rent-seeking. However, there are certain differences between diversified types of monopoly enterprises: the ones with state capital are more inclined to innovate than those without, whereas the ones with export delivery value are more inclined to seek rent than those without. Originality/value - Therefore, the government should implement differentiated policies for diversified types of monopoly enterprises, and do so in a targeted manner fully reflecting the containment of rent-seeking and the encouragement of innovation.

Keywords: Rent-seeking; Monopoly power; Total factor productivity; Productivity paradox (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eme:cpepps:cpe-04-2019-0011

DOI: 10.1108/CPE-04-2019-0011

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