Using its control of regulated inputs, a government agency extracts rents from a manager who undertakes an investment. Such government rent-seeking activity leads to a typical hold-up problem. Government ownership serves as a second-best commitment mechanism, through which the government agency...

We study China's township-village enterprises (TVEs) from an organizational perspective with a focus on governance. Unlike most previous studies, we interpret the firm boundaries of TVEs at the community level rather than the enterprise level. From this perspective, we analyze the central role...

China's remarkable economic growth occurred despite (1) the lack of secure property rights; and (2) government ownership of most non-state firms such as township-village enterprises. We unravel these two puzzles with a theory of ownership of firms facing state predation. We distinguish and...