| ID | 089555 |
| Title Proper | Common agency and state-owned enterprise reform |
| Language | ENG |
| Author | Siqueira, Kevin ; Sandler, Todd ; Cauley, Jon |
| Publication | 2009. |
| Summary / Abstract (Note) | This paper applies a common-agency model to demonstrate why recent enterprise reforms that assign the State Asset Supervision and Administration Commission (SASAC) a greater role in running China's state-owned enterprises (SOEs) are apt to fail. In a theoretical framework, we show that local principals' incentive payments are likely to clash with those of SASAC as local SOE principals' promote social stability and SASAC bolsters SOE efficiency. A second-best outcome requires a social planner to restrict actions by local principals and to impose taxes/subsidies to address inter-principal externalities. In the long run, the simplest solution is to privatize SOEs and find a public-sector funding source for promoting social stability. |
| `In' analytical Note | China Economic Review Vol. 20, No.2; Jun 2009: p208-217 |
| Journal Source | China Economic Review Vol. 20, No.2; Jun 2009: p208-217 |
| Key Words | China ; Common Agency ; State-Owned Enterprise ; Chinese Economic Reforms ; Principal-Agent Problem ; Free Riding ; Stakeholders |