The Effects of Market Liberalization and Privatization on Chinese Telecommunications

36 Pages Posted: 16 Jan 2011 Last revised: 25 Dec 2013

See all articles by Shilin Zheng

Shilin Zheng

National School of Development Peking University

Michael R. Ward

University of Texas at Arlington - College of Business Administration - Department of Economics; ZEW, Mannheim

Date Written: September 1, 2010

Abstract

The Chinese telecommunications sector is undergoing fundamental changes as it moves towards liberalization. This paper examines how liberalization and privatization have affected the performance of Chinese telecommunications industry. We identify greater liberalization with increases competition as measured by reductions in industrial concentration and privatization with deceases in state equity-ownership in firms. With a new panel dataset of thirty-one Chinese provinces from 1998 through 2007, we examine the effects of reforms on prices and subscription levels of both of mobile and fixed line telecommunications operators within both the mobile and fixed line platforms. We find large gains in market performance from decreased concentration among mobile providers not for fixed-line service. The evidence on the effects of state-ownership is similarly mixed. We then estimate substitution patterns between these telecommunications platforms and find evidence of consumer substitution between the fixed and mobile platforms for subscription, but not usage.

Keywords: Telecommunications, Competition, Privatization, China

JEL Classification: L96, L11, C33

Suggested Citation

Zheng, Shilin and Ward, Michael Robert, The Effects of Market Liberalization and Privatization on Chinese Telecommunications (September 1, 2010). China Economic Review, Volume 22, Issue 2, June 2011, Pages 210–220., Available at SSRN: https://ssrn.com/abstract=1741271

Shilin Zheng

National School of Development Peking University ( email )

No.5 Summer Palace road
Beijing 100871
China

Michael Robert Ward (Contact Author)

University of Texas at Arlington - College of Business Administration - Department of Economics ( email )

330 Business Building
Box 19479
Arlington, TX 76019
United States
817-272-3090 (Phone)
817-272-3145 (Fax)

ZEW, Mannheim ( email )

D-68034 Mannheim
Germany

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