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ID:
161807
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Summary/Abstract |
The cost of complying with a sanitary standard is certain. However, such measure introduces uncertainty for exporters in relation to border rejections. Shipments may fail to pass inspections and may be refused entry into the importing country. This risk is shaped by variance in the quality of the exported product, and the stringency of the border controls. We examine how the risk of rejection at European borders on safety grounds is affecting Chinese agri-food exporters. We combine information from the European Rapid Alert System for Food and Feed with Chinese firm-level export data by product, destination and year for the period 2000–2011. Information externalities and reputation effects are important. Border rejections amplify the turnover among firms at the extensive margin of trade. This risk is curbing small exporters and resulting in a concentration of Chinese exports among big exporters.
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2 |
ID:
089970
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Publication |
2009.
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Summary/Abstract |
With the rise of the private sector in rural China, power has been shifting from the hands of local government officials to the hands of entrepreneurs. In this situation, economic theory offers two opposing predictions regarding how local governments will react to the attrition of power: the economic losers hypothesis (local governments will resist change because it threatens their economic rents) and the helping hand hypothesis (incentives of local government are aligned with the change, limiting resistance). We econometrically test the two hypotheses using a nationally representative sample of data on almost 2500 villages in rural China. Our findings provide strong support for the economic losers hypothesis - local governments resist competition that emerges with the rise of private firms using discriminatory regulation. Our findings suggest that entrepreneurial policies that encourage an impartial regulatory environment for different types of enterprises in rural China may have long run efficiency implication for China's economy. However, left on their own, local governments may not have an incentive to promote such reforms.
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3 |
ID:
136228
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Summary/Abstract |
The 2003 Indian Electricity Act incentivizes captive power production through open access in an attempt to harness all sources of generation. Yet, we observe that only some firms self-generate while others do not. In this paper we give a transaction cost explanation for such divergent behavior. Using a primary survey of 107 firms from India, we construct a distinct variable to measure the transaction-specificity of electricity use. The ‘make or buy’ decision is then econometrically tested using probit model. Results are highly responsive to transaction-specificity and the likelihood of captive power generation is positively related to it. At the industrial level, this explains why food and chemical firms are more likely to make their own electricity. Since the burden of poor grid supply is highest on smaller sized and high transaction-specific firms, the grid access policies need to account for firm-level characteristics if government wants to incentivize captive power generation.
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