Decentralization, Collusion and Coalmine Deaths

40 Pages Posted: 13 Jul 2012 Last revised: 12 Jun 2013

See all articles by Ruixue Jia

Ruixue Jia

University of California, San Diego (UCSD)

Huihua Nie

Renmin University of China - School of Economics

Date Written: June 6, 2012

Abstract

We propose a political-economics explanation of the high death rates in China's coalmines, where the local government allows the firms to choose dangerous but profitable modes of production when collusion (between the local government and the firms) is feasible. We argue that decentralization makes collusion more likely and that the decentralization impact is further strengthened if transaction costs of collusion are lower. We test the hypothesis by investigating the impact of national decentralization and exploring within-governor variation for identification. We also provide some evidence on the deterrent effect of media exposure on collusion.

Keywords: decentralization, collusion, public bads

JEL Classification: O14, H75, L51

Suggested Citation

Jia, Ruixue and Nie, Huihua, Decentralization, Collusion and Coalmine Deaths (June 6, 2012). APSA 2012 Annual Meeting Paper. Available at SSRN: https://ssrn.com/abstract=2104749

Ruixue Jia (Contact Author)

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

Huihua Nie

Renmin University of China - School of Economics ( email )

59 Zhongguancun St., Haidian
School of Economics, RUC
Beijing, Beijing 100872
China

HOME PAGE: http://www.niehuihua.com

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