What Causes Privatization? Evidence from Import Competition in China

Qing Hu (), Wenjing Li (), Chen Lin and Lai Wei ()
Additional contact information
Qing Hu: School of Finance, Renmin University of China, Beijing 100872, China
Wenjing Li: School of Management, Jinan University, Guangzhou 510632, China
Lai Wei: Faculty of Business, Lingnan University, Tuen Mun, Hong Kong SAR

Management Science, 2024, vol. 70, issue 5, 3080-3101

Abstract: In this paper, we identify product market competition as a driver of privatization. Using product market shocks caused by trade liberalization of China, which has the world’s largest state sector, we find that subjecting state-owned enterprises (SOEs) to higher competition leads to an increase in private ownership. This response is strengthened when SOEs operate in industries with large technology or productivity gaps from those in the frontier economies or when SOEs impose large fiscal burdens on local governments. Our findings are consistent with politicians’ incentives to boost economic growth for better career development and to shed burdens when rents decrease.

Keywords: privatization; state ownership; product market competition; innovation; investment and operational efficiency (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2023.4847 (application/pdf)

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:inm:ormnsc:v:70:y:2024:i:5:p:3080-3101

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().