nep-tra New Economics Papers
on Transition Economics
Issue of 2014‒12‒13
fifteen papers chosen by
J. David Brown
United States Census Bureau

  1. Deregulation, Competition, and Market Integration in China's Electricity Sector By Yanrui WU
  2. Home Owners’ Willingness to Buy Flood Insurance in Rural China By Jinzheng, Ren Jr; Longling, Li Jr; H. Holly, Wang Jr
  3. Chinese consumers’ preferences and willingness to pay for traceable food attributes: The case of pork By Wang, Shuxian; Wu, Linhai; Zhu, Dian; Wang, Hongsha; Xu, Lingling
  4. Poverty Exit and Entry in Poor Villages in China By Zhang, Yumei; Filipski, Mateusz; Chen, Kevin; Diao, Xinshen
  5. Enhanced Measurement of Energy Market Integration in East Asia: An Application of Dynamic Principal Component Analysis By Dandan ZHANG; Xunpeng SHI; Yu SHENG
  6. The regional impact of EU association agreements: lessons for the ENP from the CEE experience By Vassilis Monastiriotis; Dimitris Kallioras & George Petrakos
  7. Commercial Plasma Donation and Individual Health in Impoverished Rural China By Chen, Xi
  8. The binding constraint on growth in less developed Western Balkan countries By Gabrisch, Hubert
  9. A Biological Basis for the Gender Wage Gap: Fecundity and Age and Educational Hypogamy By Polachek, Solomon; Zhang, Xu; Zhou, Xing
  10. Impact of Changes in Excise Duties on Households in the Czech Republic By Petr Janský
  11. State Control and the Effects of Foreign Relations on Bilateral Trade By Davis, Christina; Fuchs, Andreas; Johnson , Kristina
  12. A Model-Based Analysis of Spillovers: The Case of Poland and the Euro Area By Michal Andrle; Roberto Garcia-Saltos; Giang Ho
  13. The Value of “Made in USA”: Impact of Chinese acquisition of a US Company on Consumer Willingness to Pay By JIN, SHAOSHENG; ZHANG, YU
  14. Numerical General Equilibrium Analysis of China's Impacts from Possible Mega Trade Deals By Chunding Li; Jing Wang; John Whalley
  15. Consumer attitudes toward the use of gene technology in functional breakfast grain product: Comparison between college students from US and China By Wang, Nanying; Houston, Jack; Colson, Gregory J.; Liu, Zimin

  1. By: Yanrui WU (University of Western Australia)
    Abstract: This report presents an updated and expanded review of reforms in China’s electricity sector. It aims to examine the impact of reforms on competition, deregulation, and electricity market integration in China. The findings are used to draw policy implications for electricity market development, particularly the promotion of energy market integration (EMI).
    Keywords: electricity sector, reforms, unbundling, energy market integration and China
    Date: 2014
  2. By: Jinzheng, Ren Jr; Longling, Li Jr; H. Holly, Wang Jr
    Abstract: In Recent years, flood damage in rural China dramatically increased as a result of more frequent and severe floods. Although the policy-oriented agriculture insurance for natural disasters has been available in China, its coverage only applies to crops and livestock, not residents’ real estate and household property. In this paper, we investigate whether residents in rural China are willing to insure their property against flood damage and what kind of factors influence their willingness to seek insurance protection. Based on the national survey we conducted over 15 provinces in the summer of 2012, with 1322 valid observations, socio-economic, flood risks, insurance experience and region variable are analyzed using different models. The results show that there exists a strong need for flood insurance in rural China, and factors including flood experience in past 30 years, the elapsed time since the latest serious flood, income, and insurance experience influence rural residents’ willingness to participate in flood insurance. Policy suggestions for flood insurance are provided to the insurance industry and Chinese government at the end.
    Keywords: Agricultural Finance, Risk and Uncertainty, Flood insurance, Willingness to pay, rural property,
  3. By: Wang, Shuxian; Wu, Linhai; Zhu, Dian; Wang, Hongsha; Xu, Lingling
    Abstract: China is a large consumer and producer of pork. However, pork is a common food that frequently suffers from safety problems in China. Thus, the safety of pork is of important strategic significance to China's food safety. The food traceability system is considered a major tool for the fundamental prevention of food safety risks. In this study, four attributes, i.e., traceability information, quality certification, appearance, and price, were set for traceable pork on the basis of previous studies. Levels were set for the attribute traceability information based on the major processes of safety risk in the Chinese pork supply chain. For the level setting of quality certification, domestic and international third-party certification was included in addition to government certification. Levels of price were set by appropriately increasing the average price of pork in cities surveyed in September 2013 according to the premiums that consumers were willing to pay for particular attribute levels in a random nth price auction. Based on the above experimental design, a survey was conducted in 1,489 consumers in seven pilot cities designated by the Chinese Ministry of Commerce for construction of a meat circulation traceability system. On this basis, consumer preferences and willingness to pay for traceable pork attributes, as well as influencing factors, were investigated using choice experiments. According to the results from both mixed logit and latent class models, quality certification was the most important characteristic, followed by appearance, and traceability information. In addition, “government certification”, “fresh-looking”, and “traceability information covering farming, slaughter, and processing, and circulation and marketing” were the most preferred levels of quality certification, appearance, and traceability information, respectively. Significant heterogeneity was observed in consumer preferences for the attributes of traceable pork. Consumers’ preferences and willingness to pay for traceability information and quality certification were significantly influenced by age, monthly family income, and education level. It is hoped that the findings of this study will provide a useful reference for the Chinese government in improving traceable food consumption policies.
    Keywords: Traceable pork attributes, Consumer preferences, Willingness to pay, Choice experiment, Food Consumption/Nutrition/Food Safety, Marketing,
    Date: 2014–03
  4. By: Zhang, Yumei; Filipski, Mateusz; Chen, Kevin; Diao, Xinshen
    Abstract: Rapid economic growth in China’s booming regions has left other areas of the country lagging behind. We shed light on the poverty dynamics of one such region by analyzing a census-like survey of three administrative villages of Guizhou province in 2004, 2006, 2009, and 2011. While the absolute poverty rate is decreasing sharply in the sample, households are highly vulnerable to shocks, and rates of entry or re-entry into poverty are high. Using logistic regression and multivariate a hazard model, we look for the determinants of both poverty exit and entry. We find that poverty entry and exit are both related to household characteristics, assets, and social capital. Rural-urban migration strongly increases the probability of poverty exit, while poverty entry is associated with disease and some major life events. Our results also point to informal networks and government transfers as means of poverty alleviation, and highlight the importance of smart targeting.
    Keywords: poverty dynamics, hazard model, China, lagging region, Food Security and Poverty, International Development, I32,
    Date: 2014–06
  5. By: Dandan ZHANG (National School of Development, Peking University); Xunpeng SHI (Energy Studies Institute, National University of Singapore); Yu SHENG (Australian National University)
    Abstract: This report presents an updated and expanded review of reforms in China’s electricity sector. It aims to examine the impact of reforms on competition, deregulation, and electricity market integration in China. The findings are used to draw policy implications for electricity market development, particularly the promotion of energy market integration (EMI).
    Keywords: dynamic factor analysis, energy market integration, east asia
    JEL: C1 Q4 R1
    Date: 2014
  6. By: Vassilis Monastiriotis; Dimitris Kallioras & George Petrakos
    Abstract: The Eastern Enlargement of the EU saw a proliferation of association agreements with countries in the ‘near abroad’ under EU’s European Neighbourhood Policy framework. Although such agreements are considered to be strictly welfare-enhancing, there is very little evidence to show their economic effects, including their distributional consequences across space, separately from other concurrent processes (transition, internationalisation, capital deepening, etc). This paper draws on the experience of pre-accession agreements in Central and Eastern Europe to estimate the effect that such agreements had on regional growth, and thus on the long-run evolution of regional disparities, in the associated countries. We apply an event-analysis and exploit the country variation in the timing of these agreements to identify their distinctive effect on regional growth, using regional data at the NUTS3 levels covering the period from the early transition phase (1991/92) until the eruption of the financial crisis (2008). Our results provide strong evidence that EU association agreements accelerate growth; but show that this is far from evenly distributed across space – with denser, larger and more diversified regional economies gaining the most. We discuss what these findings imply for regional growth and spatial imbalances in the new wave of associated countries under the ENP.
    Keywords: East-Central Europe; Europe Agreements; regional development
    Date: 2014–10–16
  7. By: Chen, Xi (Yale University)
    Abstract: Blood collection following nonstandard operations largely increases the risks of infectious diseases through cross-contamination. Commercial plasma donation and the resulting HIV/AIDS and hepatitis C epidemics in central China in the 1990s killed more than one million people. Many blood banks have since moved to more remote southwest provinces, which have become new suppliers of blood plasma. Utilizing a primary longitudinal survey, this paper documents commercial plasma donation and estimates its negative health impacts in impoverished rural China using individual fixed effect models. Both the linear regression model and generalized linear models are utilized. Attracted by the financial compensation, a majority of plasma donors are poor, and bear grave consequences of malnutrition and worse health status as a result of unhygienic and frequent donations. Donating plasma is associated with a .83 standard deviation (SD) decline in self-rated health, a .54 SD lower self-rated health relative to peers in their age group, a .74 SD higher chance of being infected with hepatitis, lacking of strength to conduct farm work, and experiencing appetite loss, fatigue, nausea, and vomiting. Results indicate an urgent need of more comprehensive and effective interventions on hepatitis screening, diagnosis, and treatment among plasma donors in less developed contexts to eliminate cross-infection of infectious diseases and possible widespread epidemic in the future. Besides, we should encourage voluntary plasma donation to gradually crowd out paid donation.
    Keywords: paid plasma donation, poverty, panel data, HIV/AIDS, hepatitis, health status
    JEL: D1 I14 I18 J22 J24 J4
    Date: 2014–10
  8. By: Gabrisch, Hubert
    Abstract: The study applies an adjusted growth diagnostic approach to identify the actual binding constraint on financing growth in the West Balkan countries. This group of economies includes combined structural and systemic transformation problems. The results of the analysis indicate that the binding constraint on credit and investment growth in the region is the high and still increasing share of non-performing loans primarily in the private household sector due to policy failures. The analysis is performed in comparison with a group of advanced transition economies. Single-country and panel regressions indicate that demand side factors do not play a constraining role in the West Balkan countries but in the advanced transition economies.
    Keywords: Growth diagnostics, financial sector, non-performing loans, Western Balkan countries
    JEL: G21 G28 O16
    Date: 2014–11–18
  9. By: Polachek, Solomon (Binghamton University, New York); Zhang, Xu (State University of New York, Farmingdale); Zhou, Xing (Nankai University)
    Abstract: This paper shows how a shorter fecundity horizon for females (a biological constraint) leads to age and educational disparities between husbands and wives. Empirical support is based on data from a natural experiment commencing before and ending after China's 1980 one-child law. The results indicate that fertility in China declined by about 1.2-1.4 births per woman as a result of China's anti-natalist policies. Concomitantly spousal age and educational differences narrowed by approximately 0.5-1.0 and 1.0-1.6 years respectively. These decreases in the typical husband's age and educational advantages are important in explaining the division of labor in the home, often given as a cause for the gender wage gap. Indeed, as fertility declined, which has been the historical trend in most developed countries, husband-wife age and educational differences diminished leading to less division of labor in the home and a smaller gender wage disparity. Unlike other models of division of labor in the home which rely on innately endogenous factors, this paper's theory is based on an exogenous biological constraint.
    Keywords: gender wage gap, marital patterns, age at marriage, husband-wife age gap, husband-wife educational gap, homogamy, division of labor in the home, household economics
    JEL: J1 J2 J3 J43 J7 J8 N3 N9 O5 Y8 Z13
    Date: 2014–10
  10. By: Petr Janský (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic)
    Abstract: Excise duties are an important source of government revenue and their rates change relatively often in the Czech Republic. Reforms of excise duties change the prices of goods, a change to which households respond by adjusting their expenditures. I use detailed Czech Statistical Office data and estimates of own- and cross-price and income elasticities for individual households to create a microeconomic simulation model that enables me to simulate the impact of changes in excise duties on households’ demands. I show the distributional impact of current excise duties and then I simulate the impact of hypothetical increases of 10 per cent in each of them. I further simulate impact of certain approved or proposed changes in excise duties including the unsuccessful 2012 proposal to introduce an excise duty on wine.
    Keywords: consumer behaviour, excise duties, tax reforms, households
    JEL: D12 H20 H31
    Date: 2014–08
  11. By: Davis, Christina; Fuchs, Andreas; Johnson , Kristina
    Abstract: Do states use trade to reward and punish partners? WTO rules and the pressures of globalization restrict states’ capacity to manipulate trade policies, but we argue that governments can link political goals with economic outcomes using less direct avenues of influence over firm behavior. Where governments intervene in markets, politicization of trade is likely to occur. In this paper, we examine one important form of government control: state ownership of firms. Taking China and India as examples, we use bilateral trade data by firm ownership type, as well as measures of bilateral political relations based on diplomatic events and UN voting to estimate the effect of political relations on import and export flows. Our results support the hypothesis that imports controlled by state-owned enterprises (SOEs) exhibit stronger responsiveness to political relations than imports controlled by private enterprises. A more nuanced picture emerges for exports; while India’s exports through SOEs are more responsive to political tensions than its flows through private entities, the opposite is true for China. This research holds broader implications for how we should think about the relationship between political and economic relations going forward, especially as a number of countries with partially state-controlled economies gain strength in the global economy.
    Date: 2014–11–05
  12. By: Michal Andrle; Roberto Garcia-Saltos; Giang Ho
    Abstract: This paper studies economic and financial spillovers from the euro area to Poland in a two-country semi-structural model. The model incorporates various channels of macrofinancial linkages and cross-border spillovers. We parameterize the model through an extensive calibration process, and provide a wide range of model properties and evaluation exercises. Simulation results suggest a prominent role of foreign demand shocks (euro area and global) in driving Poland’s output, inflation and interest rate dynamics, particularly in recent years. Our model also has the capability for medium-term conditional forecasting and policy analysis.
    Keywords: Spillovers;Poland;Euro Area;Demand;External shocks;Business cycles;Cross country analysis;Econometric models;Poland, Euro area, semi-structural model, spillovers
    Date: 2014–10–17
    Abstract: In this study, we explore how the acquisition of Smithfield, the world’s larger pork producer, by a Chinese firm Shuanghui, on Chinese consumers’ WTP to meat product using experimental auctions. We conducted two sets of experiments, one when the acquisition was still pending approval and the other after its approval. Our results indicate that the acquisition benefits Shuanghui in particular and other Chinese firms in general in terms of consumer’s willingness to pay. On the other firms, the general impacts on US firms might be negative, probably due to expected lower price or reduced perceived difference between domestic and imported meat products.
    Keywords: Cross-border Merger and Acquisition, Consumer Willingness to Pay, Auctions, Meat Product, Agribusiness, Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Industrial Organization, Institutional and Behavioral Economics, Marketing, D03, D8, F2,
    Date: 2014
  14. By: Chunding Li; Jing Wang; John Whalley
    Abstract: This paper explores the potential impacts on both China and other major countries of possible mega trade deals. These include the Trans-Pacific Partnership (TPP), the Regional Comprehensive Economic Partnership (RCEP), and various blocked deals. We use a numerical 13-country global general equilibrium model with trade costs to investigate both tariff and non-tariff effects, and include inside money to endogenously determine imports on the trade imbalance. Trade costs are calculated using a method based on gravity equations. Simulation results reveal that all FTA participation countries will gain but all FTA non-participation countries will lose. If non-tariff barriers are reduced more, the impacts will be larger. All effects to China on welfare, trade, export and import are positive. Comparatively China-TPP and RCEP will yield the highest welfare outcomes for the US in our model, China-Japan-Korea FTA will generate the second highest welfare outcome, and China-US FTA will generate the third highest welfare outcome. For the US, China-TPP FTA will generate the highest welfare outcome. For the EU, all China involved mega deals have negative impacts except China-US FTA. For Japan, RCEP will generate the highest welfare outcome. For both Korea and India, RCEP will generate the highest welfare outcome.
    JEL: C68 F47 F53
    Date: 2014–08
  15. By: Wang, Nanying; Houston, Jack; Colson, Gregory J.; Liu, Zimin
    Abstract: Our study provides result using mixed logit model from analyzing of choice experiment survey data to examine college students' attitudes toward genetically modified (GM) breakfast product from U.S. and China. Here we expand on previous research by exploring certain socio-demographic, attitudinal and behavioural variables and concerns from college students from China and US and focus on the specific functional GM staple products. This would be useful in developing and characterizing market segments for food products based on consumers’ information. GM food producers and exporters can use this information to design effective marketing strategies. Results showed that college students in these two countries are willing to pay premium for the Non-GM staple breakfast products.
    Keywords: consumer attitude, Genetic Modification, WTP, college students, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,
    Date: 2014–07–27

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