IDEAS home Printed from https://ideas.repec.org/a/taf/jocebs/v1y2003i2p221-244.html
   My bibliography  Save this article

Estimating Firm Behavior under Rationing: a Panel Data Study of the Chinese Manufacturing Industry

Author

Listed:
  • Yue Ma
  • Shu Kam Lee
  • Hing Lin Chan

Abstract

The purpose of this paper is to investigate the impacts of rationing on firm behavior. A virtual price approach is adopted to derive the rationed elasticities of variable input demands and output supply under a translog profit function. To illustrate the difference between the rationed and unrationed elasticities, we conduct an analysis using a firm-level annual survey data of China over the period 1985-88. Our estimation results indicate that the values of most elasticities would have been affected significantly if the government had imposed rationing on material inputs. The behavior of Chinese firms would have been seriously distorted in a complicated way. The firms would have over-responded to market signals in making some of their input or output decisions and, at the same time, might have under-reacted, or would have not changed their reaction, in making the other input or output decisions, under a rationing regime.

Suggested Citation

  • Yue Ma & Shu Kam Lee & Hing Lin Chan, 2003. "Estimating Firm Behavior under Rationing: a Panel Data Study of the Chinese Manufacturing Industry," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 1(2), pages 221-244.
    • Handle: RePEc:taf:jocebs:v:1:y:2003:i:2:p:221-244
    DOI: 10.1080/1476528032000066703D
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/doi/abs/10.1080/1476528032000066703D
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1476528032000066703D?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sinton, Jonathan E., 2001. "Accuracy and reliability of China's energy statistics," China Economic Review, Elsevier, vol. 12(4), pages 373-383.
    2. Surjit S. Sidhu & Carlos A. Baanante, 1981. "Estimating Farm-Level Input Demand and Wheat Supply in the Indian Punjab Using a Translog Profit Function," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(2), pages 237-246.
    3. Lawrence J. Lau & Pan A. Yotopoulos, 1972. "Profit, Supply, and Factor Demand Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(1), pages 11-18.
    4. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318, Elsevier.
    5. Chao Yang Peng, 1996. "Challenges to China's Energy Security," Chinese Economies Research Centre (CERC) Working Papers 1996-08, University of Adelaide, Chinese Economies Research Centre.
    6. Neary, J. P. & Roberts, K. W. S., 1980. "The theory of household behaviour under rationing," European Economic Review, Elsevier, vol. 13(1), pages 25-42, January.
    7. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    8. Jacques Mairesse & Zvi Griliches, 1988. "Heterogeneity in Panel Data: Are There Stable Production Functions?," NBER Working Papers 2619, National Bureau of Economic Research, Inc.
    9. Sakai, Yasuhiro, 1974. "Substitution and expansion effects in production theory: The case of joint production," Journal of Economic Theory, Elsevier, vol. 9(3), pages 255-274, November.
    10. Fulginiti, Lilyan & Perrin, Richard, 1993. "The Theory and Measurement of Producer Response under Quotas," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 97-106, February.
    11. Ramon E. Lopez, 1984. "Estimating Substitution and Expansion Effects Using a Profit Function Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 358-367.
    12. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, January.
    13. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
    14. Lau, Lawrence J., 1976. "A characterization of the normalized restricted profit function," Journal of Economic Theory, Elsevier, vol. 12(1), pages 131-163, February.
    15. Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-268, August.
    16. Johnson, Todd M, 1995. "Development of China's Energy Sector: Reform, Efficiency, and Environmental Impacts," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 11(4), pages 118-132, Winter.
    17. Squires, Dale, 1994. "Firm behavior under input rationing," Journal of Econometrics, Elsevier, vol. 61(2), pages 235-257, April.
    18. Kulatilaka, Nalin, 1985. "Tests on the validity of static equilibrium models," Journal of Econometrics, Elsevier, vol. 28(2), pages 253-268, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sun, Huayu & Ma, Yue, 2005. "Policy strategies to deal with revaluation pressures on the renminbi," China Economic Review, Elsevier, vol. 16(2), pages 103-117.
    2. Zhijun Zhao & Yue Ma & Yuhui Liu, 2005. "Equity Valuation in Mainland China and Hong Kong: The Chinese A-H Share Premium," Working Papers 142005, Hong Kong Institute for Monetary Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aradhyula, Satheesh Venkata, 1989. "Policy structure, output supply and input demand for US crops," ISU General Staff Papers 198901010800009909, Iowa State University, Department of Economics.
    2. Xavier Delache & Catherine Goudounèche & Hervé Guyomard & Xavier Irz & Louis-Pascal Mahé, 1995. "Analyse micro-économique d'un marché des droits à produire en agriculture : application aux quotas laitiers en France," Économie et Prévision, Programme National Persée, vol. 117(1), pages 61-75.
    3. Squires, Dale, 2016. "Firm behavior under quantity controls: The theory of virtual quantities," Journal of Environmental Economics and Management, Elsevier, vol. 79(C), pages 70-86.
    4. Herve Guyomard & Chantal Le Mouël & U. Vasavada, 1993. "Applying duality theory in agricultural production economics as a basis of policy decision making [[Application de la théorie de la dualité en économie de la production agricole : utilisation pour ," Post-Print hal-02850915, HAL.
    5. Eswaramoorthy, K., 1991. "U.S. livestock production and factor demand: a multiproduct dynamic dual approach," ISU General Staff Papers 1991010108000010523, Iowa State University, Department of Economics.
    6. Jaouad, Mohamed, 1994. "An agricultural policy and trade model for Morocco," ISU General Staff Papers 1994010108000011483, Iowa State University, Department of Economics.
    7. Myunghun Lee & Hwan-Ok Ma, 2001. "Substitution Possibility between Unpriced Pulp and Wastepaper in the U.S. Paper and Paperboard Industry," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(3), pages 251-273, March.
    8. Hervé Guyomard & Louis Mahé, 1993. "Théorie de la production en présence de rationnements avec applications. L'exemple des quotas laitiers dans la CEE," Revue Économique, Programme National Persée, vol. 44(1), pages 71-94.
    9. Zheng, Yanfeng & Liu, Jing & George, Gerard, 2010. "The dynamic impact of innovative capability and inter-firm network on firm valuation: A longitudinal study of biotechnology start-ups," Journal of Business Venturing, Elsevier, vol. 25(6), pages 593-609, November.
    10. Pan, Shihua, 1990. "The microfoundations of mixed system of planning and markets: some theoretical considerations and an empirical analysis of the Chinese agriculture," ISU General Staff Papers 1990010108000010876, Iowa State University, Department of Economics.
    11. Christopher Klein & Reuben Kyle & J. Bass, 2004. "A Switching Regime Approach to Measuring the Effects of Technological Change in Ocean Shipping," Journal of Productivity Analysis, Springer, vol. 22(1), pages 29-49, July.
    12. Giancarlo Moschini, 1988. "A Model of Production with Supply Management for the Canadian Agricultural Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(2), pages 318-329.
    13. Barbara Hutniczak & Niels Vestergaard & Dale Squires, 2019. "Policy Change Anticipation in the Buyback Context," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(1), pages 111-132, May.
    14. Peichl, Andreas & Popp, Martin, 2022. "Can the Labor Demand Curve Explain Job Polarization?," IAB-Discussion Paper 202221, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Raja Chakir & Alain Bousquet & Norbert Ladoux, 2004. "Modeling corner solutions with panel data: Application to the industrial energy demand in France," Empirical Economics, Springer, vol. 29(1), pages 193-208, January.
    16. Guyomard, Herve & Mahe, Louis Adrien Pascal, 1993. "Producer Behaviour Under Strict Rationing and Quai-Fixed Factors," Bulletins 7489, University of Minnesota, Economic Development Center.
    17. Manuel Arellano & Olympia Bover, 1990. "La econometría de datos de panel," Investigaciones Economicas, Fundación SEPI, vol. 14(1), pages 3-45, January.
    18. Colman, David R., 1983. "A Review of the Arts of Supply Response Analysis," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 51(03), pages 1-30, December.
    19. G. E. Boyle, 1998. "A Duality Approach to Testing the Economic Behaviour of Dairy-Marketing Co-operatives: The Case of Ireland," Economics Department Working Paper Series n800798, Department of Economics, National University of Ireland - Maynooth.
    20. Colby, Hunter & Diao, Xinshen & Somwaru, Agapi, 2000. "Cross-Commodity Analysis of China's Grain Sector: Sources of Growth and Supply Response," Technical Bulletins 33565, United States Department of Agriculture, Economic Research Service.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jocebs:v:1:y:2003:i:2:p:221-244. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RCEA20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.