Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130324
Authors: 
Chau, Nancy
Qin, Yu
Zhang, Weiwen
Year of Publication: 
2016
Series/Report no.: 
IZA Discussion Papers 9641
Abstract: 
Do leader networks promote efficient intergovernmental contracts? We examine a groundbreaking policy in China where subprovincial governments freely traded land conversion quotas, and investigate the role of leader networks on the boundary between jurisdictions that embrace trade versus autarky. Consistent with the presence of Williamsonian transaction costs featuring uncertainty, incomplete contracting, and asset specificity, we find that leader career networks facilitate trade, controlling for institutional similarity and prior trade relations. However, trade gains can be limited if leader networks offer selective coverage. Using data from the Chinese experiment, we find evidence consistent with trade match distortions induced by leader networks.
Subjects: 
transaction cost
government leader network
interjurisdictional contracting
JEL: 
H11
H77
P35
R52
D23
Document Type: 
Working Paper

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