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Intra-National Protectionism in China: Evidence from the Public Disclosure of ‘Illegal’ Drug Advertising

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  • Markus Eberhardt
  • Zheng Wang
  • Zhihong Yu

Abstract

This paper provides micro-level evidence that drug advertising regulations and inspections in China are used by local governments to discriminate against firms from outside the province. Furthermore, the degree of discrimination varies across firms in that drug manufacturers which have closer ties with rival provinces are more likely to be targeted. These findings demonstrate that giving provincial governments strong incentives to compete with each other may exacerbate the market distortions inherent in a partially reformed economy such as China.

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File URL: http://www.csae.ox.ac.uk/workingpapers/pdfs/csae-wps-2013-07.pdf
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Bibliographic Info

Paper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2013-07.

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Date of creation: 2013
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Handle: RePEc:csa:wpaper:2013-07

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Keywords: China; intra-national protectionism; drug advertising;

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  1. Bai, Chong-En & Du, Yingjuan & Tao, Zhigang & Tong, Sarah Y., 2004. "Local protectionism and regional specialization: evidence from China's industries," Journal of International Economics, Elsevier, Elsevier, vol. 63(2), pages 397-417, July.
  2. Loren Brandt & Johannes Van Biesebroeck & Yifan Zhang, 2009. "Creative Accounting or Creative Destruction? Firm-level Productivity Growth in Chinese Manufacturing," NBER Working Papers 15152, National Bureau of Economic Research, Inc.
  3. Chen, Ye & Li, Hongbin & Zhou, Li-An, 2005. "Relative performance evaluation and the turnover of provincial leaders in China," Economics Letters, Elsevier, Elsevier, vol. 88(3), pages 421-425, September.
  4. Alwyn Young, 2000. "The Razor's Edge: Distortions and Incremental Reform in the People's Republic of China," NBER Working Papers 7828, National Bureau of Economic Research, Inc.
  5. Hongbin Cai & Qiao Liu, 2009. "Competition and Corporate Tax Avoidance: Evidence from Chinese Industrial Firms," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 119(537), pages 764-795, 04.
  6. Jin, Hehui & Qian, Yingyi & Weingast, Barry R., 2005. "Regional decentralization and fiscal incentives: Federalism, Chinese style," Journal of Public Economics, Elsevier, Elsevier, vol. 89(9-10), pages 1719-1742, September.
  7. Guriev, Sergei, 2004. "Red tape and corruption," Journal of Development Economics, Elsevier, Elsevier, vol. 73(2), pages 489-504, April.
  8. Carsten A. Holz, 2009. "No Razor's Edge: Reexamining Alwyn Young's Evidence for Increasing Interprovincial Trade Barriers in China," The Review of Economics and Statistics, MIT Press, MIT Press, vol. 91(3), pages 599-616, August.
  9. Alwyn Young, 2000. "The Razor'S Edge: Distortions And Incremental Reform In The People'S Republic Of China," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(4), pages 1091-1135, November.
  10. Tan, Justin & Li, Shaomin & Xia, Jun, 2007. "When iron fist, visible hand, and invisible hand meet: Firm-level effects of varying institutional environments in China," Journal of Business Research, Elsevier, Elsevier, vol. 60(7), pages 786-794, July.
  11. Natalia Ramondo & Andrés Rodríguez-Clare & Milagro Saborío-Rodríguez, 2012. "Scale Effects and Productivity Across Countries: Does Country Size Matter?," NBER Working Papers 18532, National Bureau of Economic Research, Inc.
  12. Li, Hongbin & Zhou, Li-An, 2005. "Political turnover and economic performance: the incentive role of personnel control in China," Journal of Public Economics, Elsevier, Elsevier, vol. 89(9-10), pages 1743-1762, September.
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Cited by:
  1. Herrmann-Pillath, Carsten & Libman, Alexander & Yu, Xiaofan, 2014. "Economic integration in China: Politics and culture," Journal of Comparative Economics, Elsevier, Elsevier, vol. 42(2), pages 470-492.

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