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From Tradition to Transition: Entrepreneurship, competition, and marketization in China’s early reform process

Uddenfeldt, Fredrik LU (2011) NEKK01 20111
Department of Economics
Abstract
Economic theory predicts a positive relationship between competition and innovation. Competition both forces and enables firms to innovate. On competitive markets firms are forced to innovate to avoid shrinking profit margins. At the same time competition also helps firms to innovate: On competitive markets information is dispersed among decentralized economic agents through price signals, information that can be used to identify opportunities for economic profit. Lack of competition, leading to a lack of reliable price signals, therefore reduces both the need for innovation and the possibilities for innovation. This thesis applies this strand of theory on China’s early transition from socialism. Data from 295 prefecture-level cities, from... (More)
Economic theory predicts a positive relationship between competition and innovation. Competition both forces and enables firms to innovate. On competitive markets firms are forced to innovate to avoid shrinking profit margins. At the same time competition also helps firms to innovate: On competitive markets information is dispersed among decentralized economic agents through price signals, information that can be used to identify opportunities for economic profit. Lack of competition, leading to a lack of reliable price signals, therefore reduces both the need for innovation and the possibilities for innovation. This thesis applies this strand of theory on China’s early transition from socialism. Data from 295 prefecture-level cities, from 1984 and 1987, are used to test the effects of marketization and market transition on the level of entrepreneurship, here measured as the proportion of household firms engaging in retail trade. The empirical findings suggest that marketization and market transition were important determinants of entrepreneurship during China’s early transition period, while local industrial output was an insignificant factor in determining local levels of entrepreneurship. (Less)
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author
Uddenfeldt, Fredrik LU
supervisor
organization
course
NEKK01 20111
year
type
M2 - Bachelor Degree
subject
keywords
Entrepreneurship and competition, Austrian School, China, China's early transition economy
language
English
id
1974156
date added to LUP
2011-06-21 10:26:27
date last changed
2011-06-21 10:26:27
@misc{1974156,
  abstract     = {Economic theory predicts a positive relationship between competition and innovation. Competition both forces and enables firms to innovate. On competitive markets firms are forced to innovate to avoid shrinking profit margins. At the same time competition also helps firms to innovate: On competitive markets information is dispersed among decentralized economic agents through price signals, information that can be used to identify opportunities for economic profit. Lack of competition, leading to a lack of reliable price signals, therefore reduces both the need for innovation and the possibilities for innovation. This thesis applies this strand of theory on China’s early transition from socialism. Data from 295 prefecture-level cities, from 1984 and 1987, are used to test the effects of marketization and market transition on the level of entrepreneurship, here measured as the proportion of household firms engaging in retail trade. The empirical findings suggest that marketization and market transition were important determinants of entrepreneurship during China’s early transition period, while local industrial output was an insignificant factor in determining local levels of entrepreneurship.},
  author       = {Uddenfeldt, Fredrik},
  keyword      = {Entrepreneurship and competition,Austrian School,China,China's early transition economy},
  language     = {eng},
  note         = {Student Paper},
  title        = {From Tradition to Transition: Entrepreneurship, competition, and marketization in China’s early reform process},
  year         = {2011},
}