Publication: Hayek, Local Information, and Commanding Heights: Decentralizing State-Owned Enterprises in China
Date
2017-08
ISSN
0002-8282
Published
2017-08
Author(s)
Huang, Zhangkai
Li, Lixing
Ma, Guangrong
Xu, Lixin Colin
Abstract
Hayek (1945) argues that local information is key to understanding the efficiency of alternative economic systems and whether production should be centralized or decentralized. The Chinese experience of decentralizing SOEs confirms this insight: when the distance to the government is farther, the SOE is more likely to be decentralized, and this distance-decentralization link is more pronounced with higher communication costs and greater firm-performance heterogeneity. However, when the Chinese central government oversees SOEs in strategic industries, the distance-decentralization link is muted. We also consider alternative agency-cost-based explanations, and do not find much support.
Report Series
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Associated URLs
Associated content
Citations
-
Cited 127 times in Scopus (View citations)