Insecure Property rights and Government Ownership of Firms

Jiahua Che () and Yingyi Qian

No 51, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: China's remarkable economic growth occurred despite (1) the lack of rule of law to secure property rights against state encroachment; and (2) government ownership of most new and successful non-state firms. We develop a theory of ownership under state predation that incorporates these two considerations. In our theory, "private ownership" leads to excessive revenue hiding and "state ownership" fails to provide incentives for managers and local governments in a credible way. In contrast, "local government ownership" integrates local government activities and business activities together, which may not only provide incentives for local governments, but also involves less revenue hiding from the local government and less predation from the state. Furthermore, ownership diversity across localities and within a locality is possible. Our theory is consistent with empirical evidence from China. We thus interpret local government ownership as an organizational response to imperfect state institutions.

Pages: pages
Date: 1997-03-01
New Economics Papers: this item is included in nep-law, nep-mic and nep-reg
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp52.pdf
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp52.pdf [302 Found]--> https://wdi.umich.edu/files/Publications/WorkingPapers/wp52.pdf)

Related works:
Working Paper: Insecure Property Rights and Government Ownership of Firms
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:wdi:papers:1997-52

Access Statistics for this paper

More papers in William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan 724 E. University Ave, Wyly Hall 1st Flr, Ann Arbor MI 48109. Contact information at EDIRC.
Bibliographic data for series maintained by WDI ().