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As an emerging economy, market distortions exist in China’s institutional adjustment during its economy transformation. However, the price distortion of capital and labor factors will lead to factor misallocation among provinces. This will eventually reduce the total factor productivity (TFP) at the national level. Based on Hsieh and Klenow’s [1] model framework, this paper aims to measure the degree of misallocation of capital and labor factors among provinces, and estimates the growth potential of China’s TFP by using input-output data from 1993 to 2017. The findings show that: First, the degree of inter-provincial labor misallocation is greater than that of capital. For example, in 2017, the degree of capital (labor) misallocation was 5.77% (10.25%), resulting in China’s TFP loss of 17.23%. Second, due to the factor marketization reforms, the degree of labor misallocation has declined while the degree of capital misallocation has intensified in recent years. Lastly, this paper introduces the time-varying elasticity production function model, finding that using the Cobb-Douglas production function will cause the factor misallocation to be underestimated by 5.91% due to the assumption of constant output elasticity.

This paper characterizes the firm size distribution by exploiting establishment-level censuses covering both formal and informal firms in Sub-Saharan Africa. The paper finds a "missing middle" in the employment-based size distribution of firms in four Sub-Saharan African countries. This "missing middle" hinges on the inclusion of informal firms, and it is not explained by state- or foreign-owned firms at the top of the size distribution, nor does it emerge from the size distribution of entrants. The paper reconciles these empirical results with a model of firm dynamics with endogenous informality and shows that calibrated values of entry barriers and productivity-dependent idiosyncratic distortions generate a "missing middle" that is consistent with its underlying drivers in the data.

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.

Having recognised the significant role of natural gas in reducing carbon abatement costs, China is rapidly promoting its growth. However, obvious distortions exist in China’s natural gas market, an...

This paper is concerned with cross-dependencies between endogenous market structure and tax policy. We extend the Mirrlees (Rev Econ Stud 38:175–208, 1971) model of income taxation with a monopolistic competition framework with general additively separable consumer preferences. We show that quantity and variety distortions resulting from the market structure require adjustments to income tax policy, which also needs to be complemented with commodity or firm taxation to achieve the constrained social optimum. We calibrate the model and find that in policy design the failure to account for the market structure results in a welfare loss of 1.77%. Motivated by practical cases, we study a policy regime that is solely based on income taxation. We show that departures from the social optimum can be compensated by lower and less regressive income taxes and a smaller government compared to the regime with income and commodity taxes. We also examine the role of consumer preferences for policy outcomes and show that it is substantially amplified by an endogenous market structure.

The Supreme Court’s ruling in Kelo v. New London (2005) justified the use of eminent domain for redevelopment takings based on the anticipated spillover benefits to the community in the form of increased taxes and new jobs. This paper asks whether this is a coherent economic rationale for allowing expropriation of residential land for private development. We show that, in the absence of a market distortion, the answer is generally no. However, when there is a pre-existing imperfection in the land and/or labor market, it is possible, though not guaranteed, that allowing eminent domain will increase social welfare. The reason, however, is not because of the increased tax revenue or employment per se, but rather because eminent domain increases industrial/commercial land use above the inefficiently low level that arises in the presence of the distortions. Thus, setting aside questions about fairness or holdouts, we show that whether using eminent domain for private takings can be justified on the basis of economic efficiency hinges on the existence of market distortions and the relative values of residential vs. industrial/commercial land in that particular market.

PurposeThis paper aims at developing a behavioral agent-based model for interacting financial markets. Additionally, the effect of imposing Tobin taxes on market dynamics is explored.Design/methodology/approachThe agent-based approach is followed to capture the highly complex, dynamic nature of financial markets. The model represents the interaction between two different financial markets located in two countries. The artificial markets are populated with heterogeneous, boundedly rational agents. There are two types of agents populating the markets; market makers and traders. Each time step, traders decide on which market to participate in and which trading strategy to follow. Traders can follow technical trading strategy, fundamental trading strategy or abstain from trading. The time-varying weight of each trading strategy depends on the current and past performance of this strategy. However, technical traders are loss-averse, where losses are perceived twice the equivalent gains. Market makers settle asset prices according to the net submitted orders.FindingsThe proposed framework can replicate important stylized facts observed empirically such as bubbles and crashes, excess volatility, clustered volatility, power-law tails, persistent autocorrelation in absolute returns and fractal structure.Practical implicationsArtificial models linking micro to macro behavior facilitate exploring the effect of different fiscal and monetary policies. The results of imposing Tobin taxes indicate that a small levy may raise government revenues without causing market distortion or instability.Originality/valueThis paper proposes a novel approach to explore the effect of loss aversion on the decision-making process in interacting financial markets framework.

We use a large housing transaction data set in Singapore to study whether real estate agents use information advantages to buy houses at bargain prices. Agents bought their own houses at prices that are 2.54% lower than comparable houses bought by other buyers. Consistent with information asymmetries, agent buyers have more information advantages in less informative environments, and agent buyers are more likely to buy houses from agent sellers. Agent discounts are from both “cherry picking” and bargaining power, and bargaining power contributes more to the agent discounts. Agents’ advantage consists in their information of available houses and previous purchase prices.

Harga memiliki peran yang sangat penting bagi kelangsungan hidup perusahaan. Strategi penetapan harga komoditas banyak dibahas dalam ekonomi konvensional, demikian pula penerapannya telah banyak dilakukan baik untuk mempertahankan usahanya maupun untuk bersaing memenangkan pasar. Namun apakah strategi penetapan harga tersebut sudah sesuai dengan aturan hukum Islam. Tujuan penelitian yang ingin penyusun capai adalah untuk mengetahui strategi penetapan harga komoditas dalam perspektif ekonomi syariah, Serta peran pemerintah dalam menangani permasalahan harga dalam pasar. Penelitian ini merupakan penelitian studi pustaka (library research design) dengan menggunakan pendekatan secondary analysis adapun pendekatan ini terbagi menjadi dua tahap yaitu tahap deskriptif dan tahap evaluatif. Instrument dan teknik pengumpulan data yang digunakan adalah metode dokumentasi. Teknik analisis data yang digunakan adalah dengan teknik analisis kualitatif dengan pendekatan kepustakaan yang dilakukan dengan menggunakan tiga komponen produk yaitu data reduction dan pengumpulan data, data display, dan conclusion drawing, yaitu mereduksi dan mengumpulkan berbagai data dan teori yang berhubungan dengan tema sentral dengan berbagai sumber serta mengklasifikasikannya untuk kemudian diuraikan secara sistematis, selanjutnya dilakukan kajian dan pembahasan untuk kemudian diambil kesimpulan atas permasalahan yang diteliti. Hasil penelitian diketahui bahwa strategi penetapan harga komoditas dalam perspektif ekonomi syariah dapat diterapkan dengan cara melihat kondisi pasar, baik permintaan maupun penawaran. Tidak seperti prinsip strategi penetapan harga komoditas dalam ekonomi konvensional yang memiliki tujuan akhir, yaitu maksimalisasi keuntungan dan mencari keuntungan untuk tujuan menghimpun kekayaan. Prinsip ekonomi syariah dalam harga, yaitu untuk meningkatkan kesejahteraan masyarakat dalam hal distribusi pendapatan. Mekanisme pasar tidak selalu dapat berjalan sesuai dengan konsep yang sudah ada, dengan demikian diperlukan peran pemerintah sebagai badan pengawas dalam menangani permasalahan harga di pasar agar terhindarnya dari masalah distorsi pasar. Namun pemerintah dilarang melakukan intervensi apabila pasar sedang berjalan normal. Kata kunci : Harga Komoditas, Kondisi Pasar, Peran Pemerintah, Ekonomi Syariah

The study uses a comparative-historical perspective to examine the practice of state advertising in the Hungarian media by looking at the relevant practices of three governments. Using previous eco...

Following regulatory reform in the late 20th century, US rail carriers have consistently negotiated less rigid work rules which may create a business environment that enhances carriers’ ability to employ an allocatively efficient mix of inputs. This study explores the possibility of movement away from railroad input market distortion found in research examining pre-regulatory reform input allocation, and movement toward allocative efficient use of inputs following regulatory reform. Shadow input costs are estimated using Class I railroad cost information from 1983 to 2015 to examine the change in input usage over time. Using labor as the benchmark of comparison, we find that the use of all inputs aligns in a more allocatively efficient way with labor now than in 1983. This comports well with the notion that significant easing of work rule restrictions facilitates a more efficient use of labor relative to non-labor inputs.

The ongoing COVID-19 pandemic has presented us with an unprecedented global emergency that severely threatens the lives of millions of people around the world. In response to this existential crisis, state governments have taken drastic containment measures to limit the spread of the coronavirus. The consequential lockdowns have disrupted production and economic activity and had profound impacts on major industries. The heightened financial risk has significantly slowed down new investments while stoking fears of a looming economic recession. Indeed, the pandemic-induced strong reduction in global demand has resulted in sharp falls in energy prices leading to a temporary market distortion that may impede progress in the deployment of new renewable energy projects. Besides, some countries could be at risk of falling short of their 2020 national binding targets given the lack of effective policies required to facilitate new renewable energy investments. Considering the present impacts of the COVID-19 pandemic on the global energy market, there are opportunities to highlight the important role of renewables while making the case for clean energy investments, especially in the electricity sector. This review aims to provide important insights by analyzing the significant impacts of the COVID-19 pandemic on the global energy market. On the other hand, sustainable energy strategies are also discussed in detail. Finally, lessons learned amidst the costly battle against this invisible enemy could help policymakers and government leaders in identifying the appropriate renewable energy paths for their countries in a post-pandemic future.

Market mechanism is the most important thing in determining the price level in the market. This research aims to see how the market mechanism relevance according to Abu Yusuf with modern market mechanisms. The research method used is a qualitative research methodology with a library research approach. The results showed that there is a relevance of Abu Yusuf's Islamic economic thought with modern economics. This means that there are similarities between the concept of the market mechanism according to Abu Yusuf and the modern market mechanism. Abu Yusuf opposes government intervention in setting prices. The government acts as a regulator / referee in the market mechanism. This means that the government has the duty to ensure that prices in effect in the market are fair prices, which are obtained from natural market mechanisms (based on levels of demand and supply), not monopoly or market engineering. However, the government may intervene in price when there is a monopoly or market distortion.

PurposeThis paper examines risk and risk management in public–private partnership and private finance initiatives (PPP/PFI). Despite growing interest in PPP/PFI, there are knowledge gaps in the literature. The authors’ aim is to analyse these knowledge gaps and define emerging themes to guide future research agendas.Design/methodology/approachThe authors conduct a systematic literature review from 1990 to 2018 using the Scopus database.FindingsThe authors define six emerging themes: risk definition and types of risks; value for money (VFM) and risk; risk sharing, allocation and transfer; financial risk; contractualisation and renegotiation of risk; and risk management and governance. They proposed a conceptualisation of potential development of PPP/PFI research through the three phases of risk management cycle, i.e. prospective, real time and retrospective. This paper revealed some new aspects that could help to analyse better risk and risk management in PPP/PFI to reach value for money (VFM) and to exploit the potential of PPP/PFI.Originality/valueDespite the increasing attention to PPP/PFI, further researches are required in relation to operational and post-operational risk studies, risk management and control, the role of trust. The authors’ analysis underlines the difficulties in how risk is perceived and how to ascertain VFM. In addition, the authors highlight how the increase of contract renegotiation is changing the provisions with reference to risk assignment creating market distortion. Risk should be managed as a cycle; PPP/PFI would benefit by engaging more with the risk management literature.

Part 2: Digital Transformation; International audience; Countries are struggling to develop data exchange infrastructures needed to reap the benefits of e-government. Understanding the development of infrastructures can only be achieved by combining insights from institutional, technical and process perspectives. This paper contributes by analysing data exchange infrastructures in the Netherlands and Estonia from an integral perspective. The institutional design framework of Koppenjan and Groenewegen is used to analyse the developments in both countries. The analysis shows that the starting points, cultures, path dependencies and institutional structure result in different governance models for data exchange infrastructures. Estonia has a single – centrally governed – data-exchange infrastructure that is used by public and private parties for all kinds of data exchanges (including citizen-to-business and business-to-business). In contrast, the institutional structure in the Netherlands demands a strict demarcation between public and private infrastructures, resulting in several data exchange infrastructures. While there are examples of sharing infrastructure components across various levels of the Dutch government, public infrastructures cannot be used for business-to-business or citizen-to-business data exchange due to the potential for market distortion by government. Both the centrally governed Estonian model and the decentrally governed Dutch model have pros and cons on multiple levels.

As from January 2020, the International Maritime Organization (IMO) is implementing a global 0.5% limit on the sulphur content of fuel, commonly known as the global sulphur cap. This limit is the latest policy in the efforts to reduce sulphur emissions from shipping, following the designation of emission control areas (ECAs) and other regional regulations. In this paper, a literature review is conducted of academic studies that have dealt with issues relating to the reduction of maritime sulphur emissions. Various recurring research themes are identified, spanning the areas of operations research, maritime economics and transport policy. The effects and implications of available compliance options are then analyzed from the perspectives of ship operators, shippers and consumers. Using lessons learned from the enforcement of ECA regulations, this is followed by an appraisal of various potential issues related to the enforcement of these new global regulations. It is found that a homogeneous enforcement regime is required to ensure a level playing field amongst ship operators and that the global sulphur cap may lead to serious market distortion, due to the potential short term rise of fuel prices. The paper concludes with a set of recommendations for future research on sulphur emissions from shipping in the aftermath of the global cap and, looking forward, to its relationship to the IMO strategy on the reduction of greenhouse gas (GHG) shipping emissions.

The modern stock market bears little resemblance to its form when the statutes designed to regulate it were first enacted. In the twenty-first century, the market is almost entirely digital—replete with interconnected instruments and exchanges—spanning multiple jurisdictions and products. As recently as 1969, trades could take over a week to clear; now in the era of high-frequency trading, they are effectively instantaneous. With the influx of more exchanges and instruments that trade on those exchanges, transacting at dizzying speed and magnitude, new and more difficult-to-identify forms of market distortion have emerged. Chief among those forms of distortion is open-market manipulation. Open-market manipulation—in which a trader uses facially legitimate trading methods in order to camouflage non-bona fide trades (including manipulations across markets and even in the cryptocurrency sphere)— has frustrated regulators and, in particular, prosecutors. Prosecutors and courts have struggled to fit open-market manipulation into an anachronistic statutory regime and particularly labored to prove the requisite criminal intent to manipulate in schemes comprised of facially valid trades. This failure of the law to match the conduct is exacerbated by the use of complex high-frequency trading algorithms. Since manipulative intent may often be embodied in the design of the trading algorithm itself, it presents a literal and figurative black box in certain cases. These difficulties are especially acute in the context of cross-market manipulation, in which the manipulation is based on the interplay of two different markets. In terms of its negative effects, potential magnitude, and increasing frequency, open-market manipulation, particularly cross-market manipulation, should be considered among the most volatile and dangerous forms of white-collar crime and a priority for the Department of Justice and regulators alike. This Article first identifies where the critical issues in modern manipulation prosecution lie and the split among federal circuits regarding whether open-market manipulation is even a violation of the securities laws at all. This Article then proposes solutions to these issues in the form of principles upon which regulators and judges should rely, as well as a statutory proposal to bring the regulatory landscape up to speed in an increasingly fast, complex, and volatile digital trading world. In that vein, this Article is the first to do several things. It is the first to provide an in-depth analysis of the distinct challenges involved in prosecuting open-market manipulation. It is also the first to demonstrate the particular pronounced difficulties necessarily involved in detecting, regulating, and prosecuting cross-market manipulation. Finally, it is the first to propose a tangible statutory solution to the urgent issues involved in deterring and prosecuting these forms of manipulation.