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Firms and CEOs are linked in the factor market because CEO talents are transferable across different firms. Shareholder activism increases the nontarget firm's outside option and reduces the nontarget CEO's outside option. This leads to higher profit and lower CEO compensation at the nontarget firm. Due to this positive spillover, the activist's intervention is inefficiently low. As CEO talents become more transferable, monitoring, and performance improve more and CEO compensation decreases more at the nontarget firm; shareholder activism becomes less efficient due to the increased linkage between CEOs. This paper also provides a number of novel empirical predictions.

At present, China is facing the problem of breaking down the system and institutional obstacles that hinder the free flow of factors. The development of new urbanization and urban and rural industries depends on the independent flow, efficient and fair allocation of factor markets; market-oriented allocation of factors is the development and core issue of new urbanization; the market plays a decisive role in the allocation of factor resources. On this basis, it is of great importance to put forward suggestions to further promote the free flow of factors and accelerate the development of new urbanization.

To explore whether market-oriented reform can help reduce CO2 emissions, by adopting the spatial panel data model based on the provincial panel data of China during 2001-2017, this article empirically tests the impact of labor market distortion and capital market distortion on CO2 emissions. The main findings are yielded as follows. (1) The labor market distortion and capital market distortion are widespread in China. The high wages caused by the insufficient supply of labor and the low marginal output of labor due to the shortage of human capital stock are the main reason for the positive labor market distortion. The capital market distortion can be put down to the excessive interventions of the government on the allocation of capital. (2) The labor market distortion can enhance CO2 emissions, that is, promoting market-oriented reform in the labor market can curb CO2 emissions. (3) The connection between capital market distortion and CO2 emissions can be described as a U-shaped curve. The complete marketization of the capital market and excessive government intervention in the allocation of capital can both cause an increase in CO2 emissions. (4) Improving the marketization of the labor market is effective for reducing CO2 emissions in almost all provinces. In the central region, the capital market distortion can exacerbate CO2 emissions. However, in the western region, the governmental intervention on the allocation of capital can enable limited funds to more effectively move to environmentally friendly enterprises, and avoid these provinces becoming a pollution refuge. Based on these findings, this article goes into more detail on the policy implications.

Globalization and the new understanding of the properties of knowledge, with particular attention to the limits of its appropriability, exhaustibility, transferability, and its accumulation as a result of its recombinant generation, support the revival of the Schumpeterian intuition of innovation as a creative response and its blending with the Lamarckian legacy. Globalization spawns radical changes in product and factor markets that stir a response based on innovations that is actually creative and able to contribute to the increase of productivity when the access to and use of existing knowledge stocks takes place at below equilibrium costs. A three-equations recursive system for 14 European countries from 1990 to 2016 confirms that the level of openness to international trade promotes innovative efforts that, together with knowledge costs and capital intensity, improve labor productivity growth.

Smallholder farms continue to play a prominent role in many developing countries. A substantial debate has emerged regarding the future role of smallholder farms as a means to lift rural households out of poverty and contribute to food security as part of modern agricultural value chains. This paper builds a conceptual model to compare household income and total food output under smallholder production versus a hypothetical setting wherein households cease engaging as farm owner-operators, but supply land and labor to consolidated commercial farms. Based on the empirical literature, we calibrate the model to quantify the advantages in accessing working capital and output marketing that can plausibly accrue to large-scale farming operations and offset any labor efficiency decrement compared to smallholder farms. Results show that households can earn more from renting out land and labor into competitive factor markets for a wide range of plausible market conditions. The higher the price premium commanded by and less the loss in labor efficiency on large farms, and the tighter the credit constraints on smallholders, the greater is the income advantage from supplying inputs to large farms over operating small farms. An output advantage also accrues to large farms under similar conditions.

Based on A-share listed companies' data from 2008 to 2018, we study the influence of factor market distortions on enterprises' outward foreign direct investment (OFDI) behavioral decisions and their effect on enterprises' investment productivity. We further analyze the influence of regional heterogeneity and enterprise ownership heterogeneity. First, the results show that factor market distortions suppress the outward FDI tendency of enterprises, and there are negative distortions of capital and positive distortions of labor in most regions of China. Second, there are general productivity effects on OFDI behavior. In other words, firms in non-factor-intensive and distorted regions can increase their productivity through OFDI. Third, factor market distortions and capital distortions in the eastern region enhance the investment propensity of local firms, whereas factor market distortions in the northeast, central, and western regions dampen the investment propensity of local firms. In addition, capital market distortions have a less dampening effect on SOEs and FIEs, and labor distortions have a more promoting effect on the investment propensity of FIEs and private firms.

In a simple two-sector New Keynesian model, sticky prices generate a counterfactual negative comovement between the output of durable and nondurable goods following a monetary policy shock. We show that heterogeneous factor markets allow any combination of strictly positive price stickiness to generate positive output comovement.

The current economic crisis has shaken the positions of labour unions within the EU. The underlying trend of globalization that also weakens Western trade unions was reinforced by the recession. The power of trade unions typically tends to grow during eco-nomic booms and to fall during economic recessions. In order to explain this trend we first have to understand the phenomenon of the business cycle.1 Artificial booms are triggered by the credit expansion of the banking system. Artificially low interest rates induce entrepreneurs to start more and longer investment projects than cannot be sustained by the available amount of real savings. There is a distortion between the behaviour of savers and that of investors. Entrepreneurs start more projects than savers are willing to sustain. Particularly, capital-intensive sectors are expanded during the boom due to the artificially low interest rates. Resources are shifted into these expanding sectors. At some point it becomes obvious that the boom is only financed by newly created money and is not sustained by real savings. The erroneously started investment projects have to be liquidated or restructured. Factors of production have to be shifted into the sectors where consumers really want them. In the recent cycle there was an overexpansion of highly capital-intensive sectors such as the construction sector and the automotive sector that attracted factors of production including workers. Workers are employed in jobs that produce goods that consumers do not want as urgently as other goods. Thus, the workers must be transferred into sectors that are in line with consumer preferences for the economy to recover. In order to achieve this, it is of the utmost importance for factor markets to be flexible. If factor markets are not flexible, factors of production such as labour will remain unemployed. Thereby, consumption is reduced, harming other companies that have to reduce costs and release workers, making the recession longer and harder than necessary.

This paper examines factor market competition in the US economy with quarterly 1973–2013 data for fixed capital assets, labour force, and energy Btu input. The translog production function is estim...

This paper based on the theory of marxist political economics “binary” thought, puts forward total contradiction movement in the process of social production is a new development pattern of “binary” theoretical basis, establishes a new development pattern of “binary” rely on “factor market”, “product marketing”, and needs to make full use of the domestic market on the basis of expanding the international market “market space”. At the same time, it definitely points out that “efficient market” and “efficient government” are the fundamental guarantee of the new development pattern of “double circulation”. The constraint conditions of constructing the new development pattern of “double circulation” are analyzed from four dimensions: economic system, innovation ability of market subjects, regional location and industrial structure. Finally, according to the realistic constraints of constructing the new development pattern of “double circulation”, the paper puts forward the concrete implementation path: in the top-level design of the economic system, the market should play a decisive role in the allocation of resources, and the government should play a greater role; in the aspect of cultivating the innovation ability of market subjects, we should implement the innovation-driven strategy and promote comprehensive innovation with scientific and technological innovation as the core. In terms of regional and regional cooperation and development, we will coordinate regional development internally and integrate into the global economy in an all-round way externally. At the level of industrial structure optimization and upgrading, efforts should be made to optimize the supply-side structural reform and strive to achieve a benign interaction between supply and demand.

Research Summary The market for acquiring technology companies is rife with information frictions. Although such frictions can stifle trading activity, they also provide room for strategic gain. We investigate this dual role of information frictions by exploiting an institutional reform that releases technological information to the public domain. Leveraging cross‐sectoral variation in the magnitude of disclosure, we find an increase in acquisition activity and in the technological distance between matched pairings. In line with predictions from strategic factor market theory, however, we also find a disproportionate decline in acquirer returns on average. Our findings suggest that information disclosed through the reform‐facilitated exchange in the takeover market yet had a leveling effect on the returns to acquirers. Managerial Summary Firms acquire technology‐oriented companies to complement internal R&D projects and accelerate the innovation process. But identifying promising targets is challenging, not least due to the lack of information about the value of acquired technologies. This study investigates an information shock and tests its effects on the market for acquiring technology‐intensive companies. We find that greater disclosure of technological information to the public domain intensifies trading activity and allows acquirers to better identify and assess targets outside their core technological domains. But it also reduces the returns to acquirers. In combination, our findings illuminate a dual role of information disclosure: placing more information into the public domain may facilitate trade in corporate takeover markets while simultaneously restricting acquirer opportunities for strategic gain.

After the 19th National Congress of the Chinese Communist Party, the introduction of the economic theory has promoted the integration of the global socialist market economy. Thereafter, this integration of the domestic and international market has been preliminarily completed, the role of the factor market in resource allocation has been improved, and a sturdy environment has been established for the development of Chinese enterprises. With the effective implementation of a series of policies after the financial system reform, the roles of the financial market in regulating macro-economy and revitalizing the market have become increasingly prominent. In regard to that, it has effectively promoted the financial market as a trade to “enrich people.” This paper analyzes the relationship between monetary policy and stock market liquidity in terms of the influence of the former on the latter and suggests strategies to enhance the liquidity effect of monetary policy.

PurposeThis study investigates the effect of renting in land on farm productivity, and the impacts of rented-in land size and transaction partner type on farm productivity.Design/methodology/approachData from the 2015 China Household Finance Survey are analyzed using an extended regression model and the two-stage least squares method.FindingsFarm households that rent in land are likely to achieve higher farm productivity, and ignoring endogeneity underestimates the positive effect of land renting-in. Further evidence indicates that rented-in land size has an insignificant impact on farm productivity, and that there is no difference in farm productivity between lessees renting-in land from acquaintances and those renting-in land from non-acquaintances. These results may be caused by the higher degree of marketization of land rentals between acquaintances in China. With increasing competition in agricultural factor markets, in theory, rented-in land size should not affect farm productivity.Practical implicationsOverall, the analysis suggests that renting in land improves farm productivity, which supports the land transfer policies that have been rolled out in recent decades in China. However, our finding that rented land size does not affect farm productivity, consistent with the results in the literature, implies that the Chinese government should no longer subsidize or prefer large farms with low productivity. More attention should be paid to small lessees and market-oriented land rentals between acquaintances. Promoting the marketization of land transfers inside acquaintance networks could realize the potential of the land market, especially if land transfers decrease.Originality/valueThis study identifies the effects of renting in land, rented-in land size and type of rental transaction partner on farm productivity using nationally representative data. The findings imply that the government should pay more attention to the marketization of land rentals between acquaintances. Although existing studies regard land rental between acquaintances as informal and of low efficiency, the recent evidence shows that China's land markets are changing, and policy makers should adjust their policies accordingly.

The advances in economic and social history over the past years enabled me to empirically test assumptions about the long-run development of markets. The review by Geoff Hodgson of the resulting book, The Invisible Hand?, is lucid but incomplete. I argue that the rise to dominance of factor markets, followed by that of financial markets, took place already in several early cases, and that all market economies, through an endogenous process, saw the accumulation of wealth and, next, the translation of this wealth into political leverage, creating a feedback loop with negative outcomes which is very hard to break.

Using several measures of information share, we examine price discovery across the inter-dealer and dealer–customer market tiers in the currencies market. In the spot market, the information share of the inter-dealer tier is higher than that of the dealer–customer one for non-financial sector trades and is lower than the dealer–customer tier for foreign investors’ sell trades. In the forward market, the dealer–customer tier generally has the greater information share at the dealer’s buy side. Our results indicate the market where customers’ trades are the most informative and demonstrate how exogenous events affect price discovery across markets and market tiers.

PurposeThe purpose of this paper is to evaluate the technical efficiency and production risk in China's rice production and examine the effect of factor market reform on these two agricultural performance metrics.Design/methodology/approachUsing an unbalanced farm-level panel data with 2,193 observations on 329 rice farms from 2004 to 2016, the authors estimate a translog stochastic production frontier model that accounts for both technical inefficiency and production risk. A one-step procedure through the maximum likelihood method that combines the stochastic production frontier, technical inefficiency and production risk functions is used to circumvent the bias problem often found in the conventional two-step model.FindingsEstimation results show that both land and labor market reforms significantly improved the level of technical efficiency over the years, although the effect of land market deregulation is of a much higher magnitude compared to the latter. The land market reform, however, has also increased the risk of production. The authors further find that a higher proportion of hired labor in total labor cost helps lower production risk, while also acting to decrease technical efficiency. Additionally, agricultural subsidies not only increased the output variability but also lowered technical efficiencyOriginality/valueFirst, the authors evaluate the effect of market deregulation on technical efficiency and production risk under a stochastic frontier framework that simultaneously accounts for both production performance metrics, which is important from a statistical point of view. Further, the authors exploit both cross-sectional and time-series variations in a panel setting to more accurately estimate the technical inefficiency scores and production risk for individual farmers, and investigate how the exogenous land and labor market reforms influence these two production performance measures in China's rice farming. This is the first study in the literature to analyze these questions under a panel framework.

Motivation The extent to which African farming systems are undergoing transformation continues to be strongly debated. Purpose With a focus on Tanzania, this study assesses whether recent trends in farm behaviour, the structure of farming, and agricultural commercialization and productivity conform to stylized facts about agricultural transformation. In the process, we propose an updated typology of farms that reflects recent changes in the relative importance of different farm categories and sheds light on the heterogeneity found even among smallholder farms. Approach and methods To this end, we refer to farm‐household survey data over the period 2008–2014. Findings We find that medium‐scale farms and small, farm‐focused, commercialized farms are claiming an increasingly prominent role in Tanzanian agriculture. Farmers are more likely to participate in markets for land and labour, to engage in some forms of agricultural intensification and to exhibit a commercial orientation. Over the study period, the real value of agricultural output grew substantially, mostly reflecting a remarkable expansion of cropland rather than increased land productivity. Labour productivity also grew, driven by a reduction in labour intensity. At the same time, Tanzania is experiencing a dramatic movement of labour out of agriculture. Policy implications Together, the evidence suggests that Tanzania is on the cusp of larger transformational processes in the decades to come. With this knowledge, policies can be thoughtfully shaped to support agricultural growth (particularly in land productivity) and meet farmers' diverse needs.

This article explores the relationship between land size and productivity in the livestock sector. Household panel data from pastoral areas in northwestern China were analysed. Results suggest an inverse relationship (IR) between land size and the number of livestock per ha. IR can be largely explained by labour input intensity, which is negatively correlated with land size. We find that household’s labour demand is not separable from household’s labour supply and households’ decisions to rent land and hire labour for grazing are significantly related to the labour–land endowment ratio. These findings are consistent with the Chayanovian explanation that labour input intensity varies with farm size due to unobserved interhousehold variation in shadow wage rates. In addition, participation in the labour market does not significantly influence the IR for the employer, while the practice of land renting reduces, but does not eliminate, the IR for the lease. These findings point towards the potential for using factor markets to optimise pasture‐based livestock production scale, and the need to promote the factor market development to achieve efficiency in resource use.

When competition takes place in homogenous product markets between firms based in heterogeneous factor markets, the strategic introduction of biased technological change, directed towards the intensive use of factors that are locally and exclusively cheaper, can increase knowledge appropriability. The appreciation of the strategic direction of technological change widens the role of the Schumpeterian creative response in international trade and enables to grasp the central role of process innovations. The econometric analysis at the industry level of 13 OECD countries from 1995 to 2015 supports the hypotheses that openness to trade stirs the creative response and that process innovations, together with product innovations, account for the trade surplus.

This paper investigates whether China’s outward foreign direct investment (OFDI) can solve the problem of low productivity caused by factor price distortions and the marketization of China’s factor market. For this analysis industrial enterprise data, covering a period of 5 years from 2003 to 2007, is used. To reveal the relationship between efficiency loss caused by factor price distortion and OFDI the trend score matching method is applied. The results of the analysis are threefold. First of all, the price distortion of elements inhibits the increase of total factor productivity, and labor price or capital price distortion has a significant negative impact on firm productivity. Second, foreign direct investments can mitigate the negative impact of factor price distortions on total factor productivity. Finally, from the perspective of different investment liberalization, there is a heterogeneous impact on the relationship between foreign direct investments and factor price distortions affecting the total factor productivity of enterprises.

Analyzing the effect of local government decision‐making competition on regional carbon emissions is important for reducing carbon emissions in rapidly urbanizing areas. Taking the energy rebound effect into account, this study analyzes the effect on carbon emissions of competition between local governments in decision making. Focusing on China's three urban agglomerations, this study further discusses how to avoid this influence. The results show that local government decision‐making competition is one of the main causes of the regional “green paradox”; the effect of local government decision‐making competition on carbon emissions has significant regional heterogeneity and spatial dependence, and the short‐term energy rebound effect is greater than the long‐term energy rebound effect; and local government decision‐making competition has three effects on carbon emissions that also have interaction and substitution effects between them: factor market distortion, investment bias, and the “race to the bottom” of environmental policies. However, four measures can reduce the effect of local government decision‐making competition on carbon emissions: one, improving the performance evaluation system of local governments; two, promoting the marketization of factor prices; three, improving both the energy efficiency and upgrading of industrial structures; and four, introducing macro emission reduction policies that allow the central government to intervene directly.

Agricultural marketing remains a challenge; this is because a large proportion of the population is engaged in a form of small-scale agricultural production and marketing that is characterised by a multitude of constraints and market imperfections. Paramount among the constraints are limited land availability, poor physical and legal infrastructure, high transaction costs and few available and alternative livelihood support systems. For some of these constraints to be removed, there is the need for information flow. Thus, it is believed that, spatial price transmission or market integration measures, the degree to which markets at geographically separated locations share common long-run price or trade information on a homogenous commodity. Using the co-integration approach, the results of the study using either Techiman or Kumasi as the producer markets of maize, the following markets Bolga, Wa, Ho, Tamale, Mankesim, Koforidua, Accra, Cape Coast and Takoradi/Sekond (as consumer markets) shows that there is a long run price transmission relations with the consumer markets. However, Bolgatanga market is the only exception. It is recommended that the Ministry of Food and Agriculture should intensify collection and dissemination of data on maize prices to both consuming markets and producing markets. This can be enhanced by Government establishing market information centres in these markets where both traders and farmers could go for information on the price trend of the commodity in other market(s).Keywords: Co-integration; Marketing; Market Integration; Non-stationarity; stochastic process.

When exploring the logic why some economies grow faster than others, previous studies commonly assume that all economies follow a universal growth path. This paper explores the heterogeneity of growth regimes across economies and then investigates the decomposition bias of growth sources in traditional methods. Using a panel data of China's provinces, the empirical results show that a finite mixture model with three classes is best to describe the data, revealing that there are multiple growth regimes across provinces. Also, some provinces switch regimes over time while the others remain stable. Further, neglecting heterogeneous regimes overestimates the importance of factor endowment and underestimates the importance of sector productivity, while it does not greatly influence the importance of of factor market efficiency. In particular, the decomposition bias embodies in physical capital and energy input rather than labor. Our findings indicate that the existing literature may underestimate the contribution of sector productivity. Thus, it is critical to account for heterogeneous regimes when exploring the sources of economic growth.

The following sections contain a formal description of the solution of the allocation problems in a simple model of a market economy. The analysis is first restricted to the case of an economy with private commodities on regular markets, which serves as a “benchmark”. Thereafter the investigations are extended to an economy which includes environmental or external effects. The formal model, which is adjusted to allow for special externalities, reveals the impact of environmental effects on the basic structure of the economy and the effects on the functioning of the market mechanism. The final section refers to public commodities and the public good characteristics of many environmental commodities.

In the catch-up literature, more attention has been paid to the rate rather than the direction of technological change. This paper presents and implements a novel methodology to identify and measure the effects of the direction of technological change in terms of technological congruence and its effects on total factor productivity (TFP). Evolution of the match between technology direction and the idiosyncrasies of its endowments and factor markets is a key factor in country growth. We elaborate its implications for the theory of induced technological change, and apply it to an empirical analysis of Italy’s economic history from 1861 to 2010. The results confirm the important role of the introduction of biased technological change in the assessment of the levels of technological congruence and TFP, and for supporting the long-run convergence of an early-late-comer. N13 N14 O33

Past farm subsidy research has identified the occurance of subsidy incidence to only a single input factor market (land). We expand subsidy incidence literature to a partial equilibrium two-stage dynamic game between a price-taking buyer and two Bertrand complementary input suppliers. The buyer (farmer) is the target of the government subsidy. We find that a coupled subsidy results in higher input prices for both the affiliated coupled factor (land) and its nonaffiliated complementary factor (e.g. seed). Sector welfare and welfare distribution are highly influenced by input demand complementarity. Surplus for the receiver of the coupled subsidy increases as inputs become closer complements,while aggregate surplus distribution increasingly favors the input suppliers. However, increases in sector growth from coupled subsidies (mulitplier effect) increases as inputs become closer complements. Therefore, policy aimed at mitigating subsidy incidence may reduce sector growth.

Our objective in this paper is to study the kind of price-control and rationing that is practised in some important goods and factor markets in India and some other developing countries. The reason we felt that the subject needed a detailed discussion is that the existing literature on price-controls and rationing seems to be mostly directed to a somewhat different kind of price control than obtains in India.1 It is the kind of rationing which Bronfenbrenner (1) or Samuelson [5] studied as point rationing. The basic difference is the legal presence, in the Indian type rationing, of two prices and two markets for a wide variety of essentials like rice, wheat, cement, etc. The Government fixes "a control-price" at which the seller is required by law, to sell a stipulated amount to the ration-card holder.2 Such stipulation that the seller must sell a certain minimum amount from his total production, at a controlled price, may take to two distinct forms. The first form of control (which we call price control of type I) requires the seller to sell a certain minimum absolute quantity at the controlled price. The second form (which we call price control of type II) requires the seller to sell a minimum fraction of his total output at the controlled price. In both cases the seller is free to decide his total output and also to sell in the uncontrolled market (at the market clearing price prevailing there) the excess of total output over the output sold in the controlled market. In both cases it is the uncontrolled market which handles the excess demand left from the controlled market.3 The problem for the government is to ensure that the ration quota is not diverted to the open market by the seller. Various kinds of monetary and other penalties are usually attached to such diversion. It is this diversion of output from the controlled to the uncontrolled (or equivalently