Corruption and Resource Allocation: Evidence from China
Exploiting a unique data set containing transactions data from a panel of 769 Chinese state-owned enterprises between 1980 and 1989, this paper tests microeconomic implications of a pervasive form of corruption --official diversion of under-priced, in-plan goods to the market. Corruption has the predicted effects on resource allocation. Official under-pricing of in-plan goods, which lowers the marginal cost of diversion, increases the procurement of output into the plan for the purpose of diversion. Market competition introduced by allowing firms to sell directly to the market appears to reduce corruption and therefore lessen its distortions.
|Date of creation:||01 Jun 2001|
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- Lau, Lawrence J & Qian, Yingyi & Roland, Gérard, 1998.
"Reform Without Losers: An Interpretation of China's Dual-Track Approach to Transition,"
CEPR Discussion Papers
1798, C.E.P.R. Discussion Papers.
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- Lawrence J. Lau & Yingyi Qian & Gerard Roland, 1997. "Reform without Losers: An Interpretation of China's Dual-Track Approach to Transition," Working Papers 97048, Stanford University, Department of Economics.
- Lawrence J. Lau & Yingyi Qian & Gerard Roland, . "Reform without Losers: An Interpretation of China's Dual-Track Approach to Transition," Working Papers 99010, Stanford University, Department of Economics.
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