Unified market regulation and corporate regulatory capture: Evidence from China’s law enforcement reform

How governments regulate the market to ensure fair competition remains a challenge. A key factor is the allocation of enforcement authority within market regulation. In 2018, China established the Administration for Market Regulation, unifying its regulatory enforcement authority and ending a long-standing decentralized system. Using this regulatory enforcement reform, this study examines the impact of unified market regulation on corporate regulatory capture. It finds that unified market regulation significantly reduces corporate regulatory capture expenditure. Mechanism analysis shows that the reform increases the cost and difficulty of regulatory collusion by strengthening mechanisms of administrative accountability and authority constraints, thereby suppressing corporate regulatory capture. Heterogeneity analysis reveals that the suppressive effect of unified market regulation on corporate regulatory capture is greater among firms with stronger motives for regulatory capture (poorer product quality, weaker social capital, and lower market performance), lower policy uncertainty, and in regions with a stronger integrity culture. Finally, this study finds that unified market regulation generates significant information and innovation spillover effects.