NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Industrial Policy and Competition

Philippe Aghion, Mathias Dewatripont, Luosha Du, Ann Harrison, Patrick Legros

NBER Working Paper No. 18048
Issued in May 2012
NBER Program(s):   EFG   IO

Using a comprehensive dataset of all medium and large enterprises in China between 1998 and 2007, we show that industrial policies allocated to competitive sectors or that foster competition in a sector increase productivity growth. We measure competition using the Lerner Index and include as industrial policies subsidies, tax holidays, loans, and tariffs. Measures to foster competition include policies that are more dispersed across firms in a sector or measures that encourage younger and more productive enterprises.

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This paper was revised on January 14, 2015

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Document Object Identifier (DOI): 10.3386/w18048

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