Modeling Competition Levels in the Chinese Economy: the Economic Impact of the Beijing 2008 Olympic Games

The main characteristic of the Chinese economy is economic transition from a planned to a market economy. During this process, market competition has been introduced and the competition mechanism has undergone changes. The function of the government has been changed by limiting excess interference in the economy, while the dual price system remains in some industries and public ownership plays a dominant role. These features of the Chinese economy can be captured when an imperfect competition market structure is introduced in a Chinese Computable General Equilibrium (CGE) model. This paper builds a Chinese CGE model with imperfect competition and applies this model to an empirical case — the Beijing 2008 Olympic Games. This model is in value of incorporating some keys features of Chinese transition economy and has wide applications for Chinese issues, such as international trade and agriculture. By holding the Olympic Games, the increased international tourism expenditures are injected into the host country economy. This paper will employ the developed CGE model to predict the economic impact of the international tourism brought by holding the Beijing 2008 Olympic Games in China in the year 2008. The results show the whole economy impact and the industry level impact. Policy implications will be summarized from findings.