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Internet Platform Economy and the Decreasing of Market Distortion

【Authors】
YU Wentao, WU Shiwei
【WorkUnit】
Fuzhou University, 350116.
【Abstract】

Since the introduction of the reform and opening-up policy, China has made remarkable achievements not only in efficiency growth but also in resource allocation. However, today's economic development in China still faces many obstacles, such as regional resource misallocation or market distortion. This paper raises a question: can the development of current Internet platform economy decrease the local factor market distortion? To answer that question, we build an econometric model based on China's provincial data during the period of 2009-2017. The empirical result shows that Internet platform economy has a negative and significant effect on factor market distortion. The mechanism analyses indicate that platform economy can not only increase intra-regional competition (i.e. competition effect) but also promote regional specialization (i.e. specialization effect). The paper also points out that the competition effect caused by platform economy is statistically significant among private firms but lacks significance among state-owned firms. The results are shown to be robust and consistent as using the method of instrumental variable regression. The paper provides a new perspective to increase market efficiency in the digital age.


JEL:R11, G14

【KeyWords】
Internet Platform Economy, Market Distortion, Regional Development