Hayek, Local Information, and Commanding Heights: Decentralizing State-Owned Enterprises in China | Zendy

Zhangkai Huang | Zendy; Lixing Li | Zendy; Guangrong Ma | Zendy; Lixin Colin Xu | Zendy

AI Assistant Blog Pricing

Home ZAIA Blog

Open Access

Hayek, Local Information, and Commanding Heights: Decentralizing State-Owned Enterprises in China

Author(s) -

Zhangkai Huang,

Lixing Li,

Guangrong Ma,

Lixin Colin Xu

Publication year - 2017

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.20150592

Subject(s) - decentralization , china , agency (philosophy) , government (linguistics) , business , central government , state (computer science) , industrial organization , key (lock) , economic system , state ownership , local government , market economy , economics , public administration , political science , computer science , philosophy , linguistics , computer security , algorithm , law , epistemology

Hayek (1945) argues that local information is key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the distance to the government is farther, the SOE is more likely to be decentralized, and this distance-decentralization link is more pronounced with higher communication costs and greater firm-performance heterogeneity. However, when the Chinese central government oversees SOEs in strategic industries, the distance-decentralization link is muted. We also consider alternative agency-cost-based explanations, and do not find much support. (JEL D22, D83, L25, L32, L33, O14, P31)

The content you want is available to Zendy users.

Already have an account? Click here to sign in.

Having issues? You can contact us here

Accelerating Research