Trade liberalization and decentralization of state-owned enterprises: Evidence from China

Haichao Fan; Cui Hu; Faqin Lin; Huanhuan Wang

doi:10.1111/ecin.13014

Trade liberalization and decentralization of state-owned enterprises: Evidence from China

Haichao Fan, Cui Hu, Faqin Lin, Huanhuan Wang

Law School

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

This paper examines the relationship between trade liberalization and the probability of state-owned enterprises (SOEs) being decentralized. We find that tariff cuts for inputs significantly lower the probability of a SOE being decentralized, whereas tariff cuts for outputs raise this probability. We also find that as the distance from a SOE to its overseeing government increases, the effects of input and output tariff cuts on the probability of SOEs decentralization become stronger. Our empirical results are consistent with a simple model in which local governments try to balance the costs of supervising SOEs against the profits extracted from SOEs.

Original language	English
Pages (from-to)	224-246
Number of pages	23
Journal	Economic Inquiry
Volume	60
Issue number	1
DOIs	https://doi.org/10.1111/ecin.13014
State	Published - Jan 2022

Keywords

decentralization
input tariff
output tariff
state-owned enterprise

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10.1111/ecin.13014

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title = "Trade liberalization and decentralization of state-owned enterprises: Evidence from China",

abstract = "This paper examines the relationship between trade liberalization and the probability of state-owned enterprises (SOEs) being decentralized. We find that tariff cuts for inputs significantly lower the probability of a SOE being decentralized, whereas tariff cuts for outputs raise this probability. We also find that as the distance from a SOE to its overseeing government increases, the effects of input and output tariff cuts on the probability of SOEs decentralization become stronger. Our empirical results are consistent with a simple model in which local governments try to balance the costs of supervising SOEs against the profits extracted from SOEs.",

keywords = "decentralization, input tariff, output tariff, state-owned enterprise",

author = "Haichao Fan and Cui Hu and Faqin Lin and Huanhuan Wang",

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PY - 2022/1

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AB - This paper examines the relationship between trade liberalization and the probability of state-owned enterprises (SOEs) being decentralized. We find that tariff cuts for inputs significantly lower the probability of a SOE being decentralized, whereas tariff cuts for outputs raise this probability. We also find that as the distance from a SOE to its overseeing government increases, the effects of input and output tariff cuts on the probability of SOEs decentralization become stronger. Our empirical results are consistent with a simple model in which local governments try to balance the costs of supervising SOEs against the profits extracted from SOEs.

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KW - input tariff

KW - output tariff

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Trade liberalization and decentralization of state-owned enterprises: Evidence from China

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Keywords

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