Policy burden, privatization and soft budget constraint
By J. Lin, Zhiyun Li. 2008
178 citations recorded by the source corpus.
We propose a new cause for the pervasive syndromes of soft budget constraint (SBC) in socialist and transition economies, that is, the policy burdens on enterprises result in the SBC problems. The policy burdens induce low effort input of firm manager and thus the low efficiency of production. And with the policy burdens, increasing market competition will make the SBC syndromes arise more likely. Privatization will not necessarily harden the budget constraint of the enterprise. On the contrary, when a SOE still bears the policy burdens, privatization will only aggravate the SBC problems. Because in this case, a private enterprise will demand more ex post subsidies from the government, than a SOE under the same condition. Our results help to explain many stylized facts in transition and socialist economies. Journal of Comparative Economics 36 (1) (2008) 90-102.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/f44ba1cada7e03359742658c11da73d849da9ccc
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In Economics and Econometrics
Citations in the corpus
- Institutions and Organizational Structure: The Case of State-Owned Corporate Pyramids (2013, background): “In either case, these intermediate pyramidal layers are nonpublicly traded SOEs solely owned by the local government 1.”
- Shifting patterns of economic growth and rethinking development (2012, unknown): “The subsidies to the non-viable firms post-privatization could even increase due to the private owners’ even greater incentives to lobby for subsidies and protection (Lin and Li, 2008).”