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Price distortion on market resource allocation efficiency: A DID analysis based on national-level big data comprehensive pilot zones

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  • Song, Weijiang
  • Zhao, Mengyang
  • Yu, Juan

Abstract

This study employs panel data from 284 cities in China from 2014 to 2020 and applies a two-way fixed effects model. The results confirm that price distortion significantly hinder the efficiency of resource allocation. A difference-in-differences (DID) analysis of the implementation of national big data comprehensive experimental zones reveals that the establishment of these zones effectively mitigated the inefficiencies in resource allocation caused by price distortion. Furthermore, heterogeneity analysis shows that the role of the price mechanism in improving resource allocation efficiency is particularly pronounced in central and eastern regions. Further analysis finds that price distortion primarily lead to inefficiencies through government intervention, market monopolies, and information asymmetry. Meanwhile, technological support help reduce the marginal effects of resource misallocation. Which highlights the role of policy interventions and technological innovation in correcting market failures and enhancing economic efficiency, providing empirical support for relevant policy making.

Suggested Citation

  • Song, Weijiang & Zhao, Mengyang & Yu, Juan, 2025. "Price distortion on market resource allocation efficiency: A DID analysis based on national-level big data comprehensive pilot zones," International Review of Economics & Finance, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:reveco:v:102:y:2025:i:c:s1059056025002916
    DOI: 10.1016/j.iref.2025.104128
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    Keywords

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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