This paper identifies product market competition as a fundamental impetus for privatization. Based on the economy with the largest state sector and shocks to product market competition caused by its trade liberalization, we explore whether and how competition affects privatization. We find that...

This paper documents a causal effect of trade-induced competition on the ownership dynamics of firms using the largest trade liberalization in China. By exploiting varying degrees of tariff reductions across industries, we find that firms that are more affected by competitive shock experience a...