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Regulatory bias under fiscal stress: Evidence from non-local firms in maritime transport enforcement

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  • Wang, Yukun
  • Dai, Min

Abstract

Using difference-in-differences (DID) estimation with a unique micro dataset, we find that maritime officers issue more traffic citations during periods of fiscal stress, disproportionately targeting non-local firms in line with the classic tax-exporting behavior. This regulatory bias is driven by local protectionism and enforcement discretion. The bias is stronger in regions with greater local protectionist incentives, meanwhile non-local firms are more frequently penalized under authoritative national laws rather than local regulations, and face a significant increase in average fines. Furthermore, the bias is weaker for firms from neighboring provinces, those from regions with stronger cultural ties, or those in operating cites with stronger market-supporting institutions. The bias constrains the free flow of production factors, reducing freight distance and turnover, and may lead to long-term economic and social welfare losses.

Suggested Citation

  • Wang, Yukun & Dai, Min, 2026. "Regulatory bias under fiscal stress: Evidence from non-local firms in maritime transport enforcement," China Economic Review, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:chieco:v:96:y:2026:i:c:s1043951x2600012x
    DOI: 10.1016/j.chieco.2026.102662
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    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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