Property Rights and the Nature of Chinese strongCollectivestrong.pdfVIP

Journal of Comparative Economics 28, 247–268 (2000) doi:10.1006/jcec.2000.1658, available online at on Property Rights and the Nature of Chinese Collective Enterprises1 Guoqiang Tian Texas AM University, College Station, Texas 77843 E-mail: GTIAN@TAMU.EDU Received March 15, 1999; revised March 6, 2000 Tian, Guoqiang—Property Rights and the Nature of Chinese Collective Enterprises This paper offers a rationale for gradual privatization in transitional economies through studying property rights structures and the nature of Chinese collective enterprises. First, we pose a puzzle for existing theories of property rights, and then we provide a theoretical model for determining the optimal ownership arrangements for transitional economies. This theory argues that ownership arrangements should be functions of the varying degrees of imperfection of the institutional environment. Hence, collective enterprises actually may dominate private ownership in the middle of transition. Thus, to make the transition process smooth, the economic environment before massive privatization must be improved first. J. Comp. Econ., June 2000, 28(2), pp. 247–268. Texas AM Univer- sity, College Station, Texas 77843. © 2000 Academic Press Key Words: institutional transition; property rights; optimal ownership arrangements; imperfect economic environments; Chinese township-village enterprises. Journal of Economic Literature Classification Numbers: L2, L3, P5. 1. INTRODUCTION The conventional wisdom in the property rights literature is that clearly defined propert