Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

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Governance Reforms and Growth: Some Ideas from Economic Theory
Avinash Dixit
Front. Econ. China. 2015, 10 (4): 567-584.

Abstract   PDF (219KB)

Ideas from the theory of incentives and organization are deployed to examine how some aspects of economic governance—primarily protection of property rights, enforcement of contracts, and oversight regulation—can be improved for achieving better economic growth and development. Some suggestions for reform of governance institutions in developing countries are offered.

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“One Belt and One Road” and Free Trade Zones—China’s New Opening-up Initiatives
Justin Yifu Lin
Front. Econ. China. 2015, 10 (4): 585-590.

Abstract   PDF (187KB)

“One Belt and One Road” and Free Trade Zones are two of China’s new opening-up strategies developed in response to the changed domestic and international circumstances. Implementation of these strategies can provide China with a sounder market economic system and a better external environment. It can not only help China to further develop into a high income country, but also facilitate the industrialization and modernization of other developing countries.

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Shanghai Pilot Free Trade Zone and the National Strategy of Opening-up to Boost Reform
Xinkui Wang
Front. Econ. China. 2015, 10 (4): 591-603.

Abstract   PDF (199KB)

China’s Shanghai Pilot Free Trade Zone (hereinafter referred to as “SHFTZ”) has been running for more than one year so far. The establishment of the SHFTZ is an important Chinese strategy in a key stage when the global and Chinese economies are both undergoing significant transitions, which will have a far-reaching impact on China’s transformation and development in the long term. Based on his own experience accumulated from participating in the preparation of the overall plan for the SHFTZ and his observations since its official operation officially began, the author conducts review of issues such as expected goals, selection of implementation methods and determination of evaluation criteria with respect to the establishment of the SHFTZ. In his view, the SHFTZ is a key element in China’s national strategy of using opening-up to force further reforms.

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Enforcement of Capacity-Differentiated Regulations in China: Evidence from Coal-Fired Power Plants
Qi Sun,Tiao Li,Fang Wu
Front. Econ. China. 2015, 10 (4): 604-628.

Abstract   PDF (553KB)

This article investigates the effects of the capacity-differentiated regulations that are popular in China. These regulations usually involve measures that gradually shut down small plants while allowing them to continue to operate until shutdown. We use a panel data set from coal-fired power plants during the period from 2003 to 2010 and employ the input demand equations and the difference-in-differences method to quantify the effects of these regulations. Our findings, which are robust to a variety of specifications, indicate that regulations of this type reduce capital spending and fuel efficiencies in the vulnerable small plants that are subject to shutdown under this regulation. We find no effect on the operating expenses of these small plants.

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Would a North-South Free Trade Agreement Hurt Unskilled Labor in the North?
Chu-Ping Lo
Front. Econ. China. 2015, 10 (4): 629-642.

Abstract   PDF (224KB)

I present a simple model to examine the impact of international outsourcing on the welfare of skilled and unskilled labor. In this model, specialized business services are to facilitate manufacturing production, creating additional welfare gains in the presence of positive production externalities. Policies that favor the business service sector contribute to the development of a larger bundle of specialized business services, generating more welfare gains to not only skilled but also unskilled labor. Thus, a country’s unskilled labor is not necessarily worse off with open trade if the country is prosperous in business service provisions.

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Code Sharing and Merger: Continental, Delta and Northwest
Caixia Shen
Front. Econ. China. 2015, 10 (4): 643-663.

Abstract   PDF (238KB)

When Delta joined the code share between Continental and Northwest in 2003, these three legacy carriers formed the only three-way U.S. domestic code sharing partnership. In 2008, Delta and Northwest announced their intention to merge. The merger was granted by the Department of Justice six months later. This paper analyzes the effects of the three-way code share and the effects of the merger between these two previous code sharing partners. I find both competitive effects and anti-competitive effects of code sharing, i.e., mean market price decrease in non-hub markets and price increase in hub-to-hub markets. Meanwhile, passenger volume increases significantly. Moreover, rivals’ responses are to move price in the same direction as code sharing partners. I find an increase in Herfindahl-Hirschman Index (HHI) and a reduction in traffic after the merger. Specifically, HHI increases for over 1,000 points in markets where merging airlines were either duopolistic or with a third carrier. Pre-merger code sharing markets experience an increase in HHI due to the disappearance of the code sharing contract. Low cost carrier entry mitigates merger effects.

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Unemployment and Economic Integration for Developing Countries
Haiwen Zhou
Front. Econ. China. 2015, 10 (4): 664-690.

Abstract   PDF (293KB)

While financial or trade integration between countries may increase the size of the market and aid the adoption of more advanced technologies, will it also increase the level of urban unemployment for a developing country? In this model, there is unemployment in the urban sector. Manufacturing firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Financial firms provide capital to manufacturing firms and they also engage in oligopolistic competition. We show that an increase in the wage rate in the manufacturing sector changes neither the level of technology nor the level of employment in the manufacturing sector. While financial or trade integration between developing countries leads manufacturing firms to adopt more advanced technologies, the level and rate of employment in the manufacturing sector will not deteriorate.

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Understanding the Motivation of College Students to Volunteer: An Integrated Consumption/Investment Analysis
Peiguan Wu,Xiaoye Li,Xue Wang
Front. Econ. China. 2015, 10 (4): 691-721.

Abstract   PDF (1008KB)

This study examines the specific motivation of college students to volunteer, based on the interpretation of volunteering as entailing both consumption and investment. Analysis of micro-level data, collected in an online survey from non-volunteers and volunteers on the RenDa Economics Forum, one of the main social networking sites in China, and from volunteers at the Shanghai World Expo 2010 in China, provides strong support for consumption-related motivation. However, we find no clear statistical evidence for the validity of the investment motive. Volunteering activities are found to play no significant role in determining future income when compared to other factors, such as test scores, gender, age, parents’ education, job location, and the type of employer.

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