Thursday, November 23, 2017

Barriers to Fair Competition

Yongwei Chen, Peking University and Yiqun Ye, Peking University - Peking University Law School study Barriers to Fair Competition.

ABSTRACT: This paper analyses three types of barriers that lead to market distortion: market segmentation, industry monopoly and industrial policy. Then we estimate the efficiency and welfare loss caused by these three distortions. The results show that the loss caused by market segmentation and industry monopoly respectively account for 6.42% and 18% of annual GDP. And either market segmentation or industry monopoly has been deeply influenced by industrial policies. We must correct these distortions if we truly want to establish a unified, open market system with orderly competition identified by the third plenary session of the 18th Communist Party Central Committee of CPC. To achieve this goal, we should not only change policies, but also reform institutions.

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