THE LAW OF ONE PRICE IN CHINESE FACTOR MARKETS

Jeffrey Zax () and Yin He
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Yin He: Department of International Trade, University of International Business and Economics, No. 10 Huixin East St., Chaoyang District, Beijing 100029, P. R. China

The Singapore Economic Review (SER), 2016, vol. 61, issue 04, 1-31

Abstract: This paper investigates whether Chinese factor markets became more integrated in the period around World Trade Organization (WTO) accession. This would have required reductions in factor price dispersion. However, prices for 18 agricultural factors between 1998 and 2001 and for 118 industrial factors between 1999 and 2002 varied significantly across 36 cities. Variation declined temporarily for industrial factors, but not for agricultural factors. Sixteen factors displayed many city-specific price components, suggesting that they may have been subject to domestic trade restrictions. Idiosyncratic prices for agricultural factors were concentrated in two cities. However, most cities had idiosyncratic prices for at least some industrial factors.

Keywords: China; law of one price; local protectionism (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1142/S0217590815501015

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