Incremental Reform and Distortions in China's Product and Factor Markets
研究中国渐进式改革如何导致寻租行为从产品市场转向资本市场，造成市场扭曲，并呼吁进一步改革以消除寻租机会。
The purpose of economic reform is to reduce distortions and enhance efficiency. However, when reforms are partial and incremental, individuals and local governments are often able to capture the rent inherent in the gradual transition process. <cross-ref type="bib" refid="LHM002C41">Young (2000)</cross-ref> warned that such rent-seeking behavior might lead to increasing market fragmentation. Empirical studies have shown the opposite in the product market. This article argues that as the rent from China's product market has been squeezed out due to deepening reforms, rent-seeking behavior may have shifted to the capital market. Further reforms are needed in the capital market to squeeze out these rent-seeking opportunities, just as those from the product and labor markets were squeezed out earlier.