From the Grabbing Hand to the Helping Hand: A Rent Seeking Model of China's Township-Village Enterprises

Jiahua Che ()

No DP2002-13, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: I present a study of ownership of firms under government rent seeking. Using its control of regulated inputs, a government agency extracts rents from a manager who undertakes an investment. Such a government rent seeking activity leads to a typical hold-up problem. Government ownership is shown to serve as a second best commitment mechanism through which the government agency will restrain itself from the rent seeking activity and even offer the manager support and favor such as tax breaks and subsidies.

Keywords: Government business enterprises; Microeconomics; Organizational behavior; Decision making (Public administration) (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (2)

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