China’s industrial policy has evolved significantly since the 1980s, serving as a key driver for its technological catch-up and transition from a planned to market economy. Although government-backed sectors have achieved notable economic successes, these policies have also led to negative effects, including overcapacity, ineffective innovation support, and repeated investments ignoring comparative advantages. Recent central government decisions emphasize allowing market mechanisms to play a decisive role in resource allocation and prohibit local authorities from creating discriminatory policies. Looking ahead, China is expected to better coordinate industrial and competition policies, while developing strategic emerging industries and strengthening supply chain resilience through independent innovation and high-standard opening-up measures.

Incumbent firms can acquire startups to eliminate potential competition rather than develop new technologies—a strategy known as “killer acquisitions”. This study develops a model to examine an incumbent’s incentives to acquire a startup operating in an upstream industry and evaluates the welfare implications under two market structures: vertical separation (VS) and vertical integration (VI). The analysis shows that, under two-part tariff contracts, the incentives for killer acquisitions are stronger under VI than under VS when the synergy effect generated by an acquisition is strong. Moreover, total welfare generally declines as killer acquisition incentives increase. By considering linear-pricing contracts, we further illustrate a broader message: changes in market structure significantly affect the incentives for killer acquisitions, depending on the interaction between the contractual environment and the synergy effect. These findings offer policy insights for evaluating acquisitions in upstream industries and for regulating VI by an upstream incumbent in innovative industries.

Residential photovoltaics (PVs) are a key lever of China’s energy transition strategy to safeguard energy supplies, reduce environmental pollution and curtail CO2 emissions. With the objective to understand the explanatory power of the extended definition of compatibility in the diffusion of innovation theory and the influence of the rural population on regional adoption of residential PVs, this study investigates the relationship between residential photovoltaic (PV) installations in cities at the prefecture level, and rural population and other prevalent explanatory variables, using spatial econometric models to a recently available dataset in China. The results indicate a statistically significant positive relationship between rural population and regional installations of residential PVs, validating that the extended definition of compatibility can still contribute to the explanation of innovation diffusion. Moreover, there is a statistically significant positive relationship between GDP per capita, electricity price, and solar irradiation, and regional installations of residential PVs, with significant spillover effects across cities. Our study contributes to the expansion of the definition of compatibility and improves the insight into the determinants on regional diffusion of residential PVs. This is helpful in orienting economic and developing policies related to residential PV deployment in China and other developing countries.

This paper studies the effect of product liability cost on firms’ incentives to conduct R&D when innovation inherently consists a safety dimension and a novelty dimension. We consider a situation where a monopoly firm chooses both product novelty and product safety in an R&D stage followed by a production stage. While firms will invest more in product safety as product liability cost increases, their incentive for product novelty may increase or decrease, depending on the relative strengths of a demand-shifting effect and a cross-R&D effect identified in the model. Consequently, a higher product liability cost may decrease consumer welfare and total welfare. We extend the results to an oligopoly model with differentiated products and study the effects of competition. We find that equilibrium product novelty and safety levels decrease with the number of firms but exhibit non-monotonic relationships with the degree of product substitutability.

This study examines basic research investments by firms. Successful basic research investment reduces the marginal cost of applied research. We show that firms invest in basic research in equilibrium for all levels of spillover factors. Compared with the socially optimal level, firms underinvest in basic research. Cooperation in basic research can lead to less investment and reduced welfare even when the degree of spillover of basic research is high. We also show that compared with a duopoly, a public research institute may invest less in basic research. This occurswhen the firm-invested basic research spillover is imperfect and the basic research investment is sufficiently efficient.

Culture is one of the crucial elements of technological innovation. The existing studies hold that Confucian culture is conducive to the technological innovation of Chinese Listed Companies. However, Chinese family enterprises with relatively profound Confucianism encounter the bottleneck of weak innovation. This makes people wonder whether Confucian culture is conducive to the technological innovation of family enterprises. To solve this mystery, we investigated the effects of Chinese Confucianism on technological innovation in Chinese family enterprises. We found that family entrepreneur’s entrepreneurship had worse innovation performance under the influence of Confucian culture. The results are robust to different measures of innovation and are still valid when controlling for the potential endogeneity between Confucian culture and technological innovation. This study provides a more fine-grained perspectives about Chinese innovation culture.

After years of debate, Hong Kong's new competition law, the Competition Ordinance (CO), took effect in December 2015. Laying out rules to support competitive markets and creating the institutions to administer and enforce those rules, the CO is a modern competition law in many respects, following many best-practices and respecting recent learning in competition economics. This article argues, however, that-at least from an economist's perspective-in its drafting a series of decisions were made that weaken the law. None is that unusual or critical on its own, however collectively they leave the law less powerful than competition enthusiasts might desire in a modern market economy. We discuss the implications of these decisions and go on to consider some other more unique aspects of the law that might need reconsideration at some point. Finally, we document and discuss the early activities of the Competition Commission of Hong Kong. We conclude that Hong Kong is off to a good start with its new law and its enforcement but that several reforms have the potential to bring a more robust competition policy regime.

This paper analyzes the effect of command-and-control regulation on firms’ incentives for pollution abatement, market structure, and social welfare. We consider a regulation under which firms are not allowed to produce if they were found in noncompliance with the preset emissions standard during the government’s imperfect inspection. In the case of the ex ante monopoly, a loose standard coupled with an intensive inspection effectively induces perfect compliance. In the case of the ex ante duopoly, the intensified inspection directly creates market entry barriers, but it also induces firms to increase abatement investments for better environmental compliance, which indirectly promotes market competition. Moreover, a firm invests more in pollution abatement if it is initially cleaner or more production-efficient than its rival, or if it has fewer potential rival. We also find that regulatory tightening may harm social welfare by reducing the probability of entry, and social welfare may be higher under monopoly than under duopoly when government inspection is sufficiently intensive.

We study how vertical market structure affects the incentives of suppliers and customers to develop a new input that will enable the innovator to replace the incumbent supplier. In a vertical setting with an incumbent monopoly upstream supplier and two downstream firms, we show that vertical integration reduces the R&D incentives of the integrated parties, but increases that of the nonintegrated downstream rival. Strategic vertical integration may occur whereby the upstream incumbent integrates with a downstream firm to discourage or even preempt downstream disruptive R&D. Depending on the R&D costs, vertical integration may lower the social rate of innovation.

Based on overseas M&A cases during 2013-2017, this study investigated the factors influencing the performances of Chinese enterprises in overseas M&A within the context of the "Belt and Road Initiative" from the perspective of political connections. The following conclusions were reached: (1) the ownership of a target firm of an M&A in a member country of the "Belt and Road" club has no significant impact on the firm's performance in the short term but has a significant negative impact in the long run; (2) a higher proportion of state-owned shares is conducive to accomplishing overseas M & A; (3) having senior executives with strong political backgrounds would improve the firm's performance in overseas M&A in the short term but may damp in the long run. Chinese enterprises can take advantage of the "Belt and Road Initiative" and government resources to promote overseas M&A. They should carefully select their target firms and make efforts to strengthen integration in order to achieve good synergy between the acquiring and acquired firms. The government should improve the communication and coordination mechanisms between China and other member countries of the "Belt and Road Initiative", provide more supports to achieve win-win scenarios among countries, markets, and enterprises.

The EU v. Intel case, which lasts for nearly a decade, sparks a discussion of what analytical framework and test methods should be used for loyalty discounts.Some scholars believe that loyalty discounts should use the analytical framework of predatory pricing and price cost testing, while others suggest that loyalty discounts should use an analytical framework for exclusive dealing with the equally efficient competitor test.The answer to the above questions needs to clarify the economic logic behind loyalty discounts. Taking the Intel case as the analysis scenario, this paper analyzes the theory of competitive damage of loyalty discounts.By comparing and analyzing the economic logic of predatory pricing and exclusive dealing, it is found that loyalty discounts and exclusive dealing should belong to the category of raising rivals ' costs. Therefore, loyalty discounts should adopt the analysis framework of exclusive dealing.Moreover, since the price below cost is neither a sufficient condition nor a necessary condition for loyalty discounts, loyalty discounts should be based on a more reasonable test, namely, the equally efficient competitor test rather than a price cost test.

Pacific Economic ReviewVolume 21, Issue 2 p. 178-179 SPECIAL SECTION: FROM THE EIGHTH BIENNIAL CONFERENCE OF THE HONG KONG ECONOMIC ASSOCIATION Introduction: Pushing Forward the Frontier of Knowledge in Economic Science Ping Lin, Corresponding Author Ping Lin Lingnan University, Hong KongAddress for Correspondence: Lingnan University, Hong Kong E-mail: plin@ln.edu.hkSearch for more papers by this author Ping Lin, Corresponding Author Ping Lin Lingnan University, Hong KongAddress for Correspondence: Lingnan University, Hong Kong E-mail: plin@ln.edu.hkSearch for more papers by this author First published: 17 May 2016 https://doi.org/10.1111/1468-0106.12161Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat No abstract is available for this article. Volume21, Issue2May 2016Pages 178-179 RelatedInformation

相关市场界定是反垄断执法工作的重要步骤.《反垄断法》实施6年多来,执法部门一直面临市场界定的难题.价格检验法是相关市场界定的重要方法之一,它对数据要求低、操作简单,可以作为市场界定的最佳初步分析为其他方法提供有效补充.本文使用2010年1月到2013年8月七个知名白酒品牌城市价格面板数据,对2013年初茅台、五粮液垄断案所涉及的相关产品市场和相关地域市场界定进行了定量分析.本文使用了多种检验方法,建立综合量化评价体系,以避免单一检验所导致的错误市场界定.本文发现,53度茅台和52度五粮液等超高端品牌酒构成一个反垄断相关市场,其地域市场为全国性市场.本文的结论不仅对茅台、五粮液垄断案提供(事后)支持,对中国白酒行业将来可能出现的垄断行为,也提供反垄断执法基础工作的支持.本文所采用的研究方法为使用价格检验法在其他领域的相关市场界定提供了有益参考.

传统的反垄断分析方法直接应用于双边市场将产生错误的结论.本文对过去十几年间国外产业经济学界对双边市场中相关市场界定问题研究进行较全面、系统的回顾和梳理,对学术讨论中提出的一些建议进行了初步评估,以期筛选出较合理的建议,为中国反垄断法实施提供思路和参考.本文详细总结了国际产业经济学界最新的观点,建议竞争法执法机关应该根据双边市场的类型采取不同的市场界定改进方法.

By constructing simple Cournot competition model ,this article analyzes foreign vertical merger's effect on the price of upstream firms input and the final product and the total welfare in the absence of efficiency advantage . It is found that although the merged will implement market foreclosure under certain conditions ,price of the input and final product is still reduced .In addition , the increase of total welfare in the merger between domestic enterprises is always higher than that in the foreign acquisition of domestic enterprises .This article also proves that in the case of foreign vertical merger ,the aim of the competition policy is coordinated with that of the merger between domestic enterprises .

Using a large, unique, firm-level dataset from the Chinese manufacturing sector, we study important factors that are related to emission intensity for three pollutants in China – sulfur dioxide, wastewater, and soot. Our main findings are as follows: 1) compared to state-owned enterprises (SOEs), both foreign-owned firms and domestic public-listed firms exhibit less intensive pollutant emissions; 2) firms in regions with less local protection have lower pollution intensity; 3) better property rights protection is negatively correlated with pollutant discharge over and beyond the national standards; and 4) larger firms, firms in industries that export more, and firms with more educated employees pollute less. These results suggest that China should not target foreign firms more harshly in its effort to reduce industrial pollution. Better institutions in the form of more effective law enforcement and lower entry barriers across regional markets are also means of curbing China’s pressing environmental problems during its current stage of economic development.