Too many mothers-in-law?

Yuk Shing CHENG, Kim Sau CHUNG*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

2 Citations (Scopus)

Abstract

Developing countries with low tax capacity may rely on predation to finance government functions. Government predation, in turn, is often accused of imposing a choking effect on state-owned enterprises (SOEs), contributing to the latter's poor performance. We formalize this choking effect as a problem of inefficient predation that arises from time inconsistency, and show that having multiple government bodies supervising the same SOE may mitigate this problem. Our theory provides an efficiency rationale for the Chinese style of decentralization before 1978, and challenges the wisdom of China's recent enterprise reform that attempted to consolidate supervisory power.

Original languageEnglish
Pages (from-to)69-76
Number of pages8
JournalJournal of Development Economics
Volume105
Issue number1
DOIs
Publication statusPublished - 2013

Scopus Subject Areas

  • Development
  • Economics and Econometrics

User-Defined Keywords

  • Government predation
  • H7
  • P3
  • Policy burden
  • State-owned enterprises
  • Transitional economies

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