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Factor market’s distortion, Markup and TFP
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TitleFactor market’s distortion, Markup and TFP  
AuthorGai Qingen,Zhu Xi,Cheng Mingwang and Shi Qinghua  
OrganizationShanghai University of Finance and Economics; Shanghai Jiao Tong University; Tongji University;;; 
Key WordsResource misallocation, Monopoly power, Total Factor Productivity 
AbstractResource misallocation can lower aggregate total factor productivity (TFP). This paper constructs relationship among factor market’s distortion, monopoly power and TFP through a Theoretical model and exploit micro data on manufacturing establishments during 1998-2007 to quantify the potential extent of misallocation in China. The result shows manufacturing TFP gains of 70.88%-88.75% if we can eliminate marginal product gap of firms. The main distortion is from capital market, markup is in the second position, and minimal distortion is the labor market. At the end, we check different effect related to labor income’s share, state-owned enterprises and firm’s size. The main result has the same trend as previous research and our model is robust. 
Serial NumberWP793 
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