Title

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

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