Market Design in Chinese Market Places

37 Pages Posted: 29 Nov 2012

See all articles by Barbara Krug

Barbara Krug

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); Erasmus Research Institute of Management (ERIM)

H. Hendrischke

University of New South Wales (UNSW) - Faculty of Arts and Social Sciences

Date Written: November 28, 2012

Abstract

The Market Design (MD) approach to institutional analysis provides the analytical tools to evaluate endogenous institution building in local market places irrespective of the institutional setting of the national economy. Implicit in this analysis of endogenous institution building at the market place level is the recognition of institutional diversity, which none of the conventional forms of institutional analysis can provide. We extend the MD approach from its original game theory perspective to examine three market places in China: township and village enterprises, equity joint ventures and public utilities. We conclude that the MD approach (1) provides the analytical tools and criteria to evaluate whether or not market places are robust and sustainable, (2) links market behavior at the market place level, which is characterized by size, coordination and trust problems, with general level considerations based on transaction costs, and (3) suggests that functioning market places are achievable, even if the formal institutions of the general economy are weak or partially missing. Our research has policy implications and opens new avenues for research into the emergence of markets.

Keywords: China, international business, market design

JEL Classification: %s

Suggested Citation

Krug, Barbara and Hendrischke, Hans, Market Design in Chinese Market Places (November 28, 2012). ERIM Report Series Reference No. ERS-2012-021-ORG. Available at SSRN: https://ssrn.com/abstract=2182373

Barbara Krug (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands

Erasmus Research Institute of Management (ERIM) ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Hans Hendrischke

University of New South Wales (UNSW) - Faculty of Arts and Social Sciences ( email )

Sydney
Australia
+61 2 9385 2187 (Phone)
+61 2 9385 1190 (Fax)

HOME PAGE: http://languages.arts.unsw.edu.au/staff/staff.php?first=Hans&last=Hendrischke

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