Towards Fair Competition in China
35 Pages Posted: 2 Oct 2017 Last revised: 9 Oct 2019
Date Written: September 29, 2017
This paper analyses three typical barriers that lead to market distortion in contemporary China: market segmentation, industry monopoly, and industrial policy. Then we estimate the efficiency and welfare loss caused by these three barriers. The results show that the loss caused by market segmentation and industry monopoly respectively account for 6.42% and 18% of annual GDP. And either market segmentation or industry monopoly has been deeply influenced by industrial policies. These distortions must be corrected if we truly want to establish a unified and open market system with orderly competition identified by the third plenary session of the 18th Communist Party Central Committee of CPC. To achieve this goal, we should not only change policies, but reform institutions as well.
Keywords: fair competition; market segmentation; industry monopoly; industrial policy
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