Competition policy and firm productivity: Quasi-experimental evidence from China

China enacted the Anti-Monopoly Law in 2008. This law is deemed a milestone of competition policy to improve market efficiency in the country. This paper builds a theoretical model and applies a difference-in-differences method using a firm-level dataset of the 1998-2015 period to examine the impact of this law on firm productivity. We show that the enactment of this law significantly increased the total factor productivity (TFP) of the firms. The results are shown to be robust across alternative definitions of the treatment variable and alternative measures of productivity. Finally, we show that the productivity effect of this law tends to be stronger among state-owned enterprises than private/foreign firms and large firms than small firms.

Automated summary

The Anti-Monopoly Law enacted in China in 2008 is an important competition policy that has a significant impact on firm productivity. This study finds that the implementation of this law has effectively increased the total factor productivity of firms, with a stronger effect observed among state-owned enterprises and large firms.