Estimating firm behavior under rationing : a panel data study of the Chinese manufacturing industry
Document Type
Journal article
Source Publication
Journal of Chinese Economic & Business Studies
Publication Date
5-1-2003
Volume
1
Issue
2
First Page
221
Last Page
244
Keywords
Rationing, Virtual Prices, Translog, Panel Data, China
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.
DOI
10.1080/1476528032000066703D
Print ISSN
14765284
E-ISSN
14765292
Publisher Statement
Copyright © 2003 TheChineseEconomic Association-UK
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Ma, Y., Lee, S. K., & Chan, H. L. (2003). Estimating firm behavior under rationing: A panel data study of the Chinese manufacturing industry. Journal of Chinese Economic & Business Studies, 1(2), 221-244. doi: 10.1080/1476528032000066703D