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From the Grabbing Hand to the Helping Hand: A Rent Seeking Model of China's Township-Village Enterprises

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  • Jiahua Che

Abstract

I present a study of ownership of firms under government rent seeking. Using its control of regulated inputs, a government agency extracts rents from a manager who undertakes an investment. Such a government rent seeking activity leads to a typical hold-up problem. Government ownership is shown to serve as a second best commitment mechanism through which the government agency will restrain itself from the rent seeking activity and even offer the manager support and favor such as tax breaks and subsidies.

Suggested Citation

  • Jiahua Che, 2002. "From the Grabbing Hand to the Helping Hand: A Rent Seeking Model of China's Township-Village Enterprises," WIDER Working Paper Series DP2002-13, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:dp2002-13
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    References listed on IDEAS

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    Cited by:

    1. Alexandre De Podestá Gomes, 2018. "The mainstream economics interpretation of the local state and central-local relations in Post-Mao China: a critical review," Working Papers 214, Department of Economics, SOAS University of London, UK.
    2. Sun, Laixiang, 2002. "Fading out of local government ownership: recent ownership reform in China's township and village enterprises," Economic Systems, Elsevier, vol. 26(3), pages 249-269, September.

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