Economics, Econometrics and Finance
3 years ago

Local protectionism in China's auto market leads to $21.9B consumer loss.

American Economic Journal Economic Policy
Local Protectionism, Market Structure, and Social Welfare: China’s Automobile Market
Panle Jia Barwick, Shengmao Cao, Shanjun Li

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Local protectionism in China's automobile market favors local brands over national ones, leading to consumer welfare loss of 21.9 billion yuan. This protectionism distorts consumer choices and reduces overall social welfare, but provincial governments are reluctant to remove it due to a prisoner's dilemma.