T. Zhu, A THEORY OF CONTRACT AND OWNERSHIP CHOICE IN PUBLIC-ENTERPRISES UNDERREFORMED SOCIALISM - THE CASE OF CHINA TVES, China economic review, 9(1), 1998, pp. 59-71
We construct a formal model on the general lines of the rent-seeking t
heory to explain the pattern of contractual and ownership arrangements
and its evolution in China's township and village enterprises. We sho
w that because local government officials are not the residual claiman
ts of TVEs and are corruptible, they may have incentives to make ineff
icient choices. But market competition will force them increasingly to
adopt efficient arrangements JEL Classification Numbers: P26, P31, D2
3, and L32.