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The Law Of One Price In Chinese Factor Markets

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  • JEFFREY S. ZAX

    (Department of Economics, University of Colorado Boulder, 256 UCB, Boulder, CO 80309-0256, USA)

  • YIN HE

    (Department of International Trade, University of International Business and Economics, No. 10 Huixin East St., Chaoyang District, Beijing 100029, P. R. China)

Abstract

This paper investigates whether Chinese factor markets became more integrated in the period around World Trade Organization (WTO) accession. This would have required reductions in factor price dispersion. However, prices for 18 agricultural factors between 1998 and 2001 and for 118 industrial factors between 1999 and 2002 varied significantly across 36 cities. Variation declined temporarily for industrial factors, but not for agricultural factors. Sixteen factors displayed many city-specific price components, suggesting that they may have been subject to domestic trade restrictions. Idiosyncratic prices for agricultural factors were concentrated in two cities. However, most cities had idiosyncratic prices for at least some industrial factors.

Suggested Citation

  • Jeffrey S. Zax & Yin He, 2016. "The Law Of One Price In Chinese Factor Markets," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(04), pages 1-31, September.
    • Handle: RePEc:wsi:serxxx:v:61:y:2016:i:04:n:s0217590815501015
    DOI: 10.1142/S0217590815501015
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