THE IMPACT OF REFORM ON SOCIALIST ENTERPRISES IN TRANSITION - STRUCTURE, CONDUCT, AND PERFORMANCE IN CHINESE INDUSTRY

This paper investigates the degree to which socialist enterprises in transition mimic the behavior of the canonical neoclassical firm. Using enterprise survey data, we find evidence that Chinese factory managers economize on factor inputs in response to increases in managerial autonomy and market orientation. In addition, we find evidence of increasing allocative efficiency as measured by patterns of factor return equalization and rapid capacity growth among the most profitable enterprises and that some combination of regulation and market discipline is causing price and wage-setting behavior to be more efficient than most analysts have anticipated. © 1991.