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Picking winners in strategic emerging industries using government subsidies in China: the role of market power

Business

Picking winners in strategic emerging industries using government subsidies in China: the role of market power

J. Shi, B. M. Sadowski, et al.

This fascinating study reveals how government subsidies can significantly boost labor productivity in China's strategic industries, influenced by market power dynamics. The research conducted by Junguo Shi and colleagues uncovers critical insights into the varying impacts on domestic versus foreign firms, paving the way for smarter subsidy policies.

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Playback language: English
Abstract
This study investigates the impact of government subsidies on company labor productivity in China's strategic emerging industries, considering market power dynamics. Analyzing 1392 listed companies from 2006 to 2019, the study finds that high seller power enhances the positive effect of subsidies on productivity, while high buyer power weakens it. Domestic firms show greater sensitivity to market power compared to foreign-invested companies. Policy recommendations emphasize the importance of considering market power when designing subsidy mechanisms.
Publisher
Humanities and Social Sciences Communications
Published On
Jul 10, 2023
Authors
Junguo Shi, Bert M. Sadowski, Xinru Zeng, Shanshan Dou, Jie Xiong, Qiuya Song, Sihan Li
Tags
government subsidies
labor productivity
China
market power
strategic emerging industries
policy recommendations

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