The effects of skyscraper development on surrounding firms’ innovation in China is assessed in this paper, and empirical results show that skyscraper development significantly promotes the innovation of firms within 1 km of skyscrapers. However, such effect only exists around very tall skyscrapers in large cities. This means that skyscraper development in small cities often is unfit for the economic fundamentals of these cities, which may weaken the positive externalities generated by skyscrapers. The mechanism analysis in this paper shows that increased surrounding population density brought by skyscraper development and knowledge sharing between firms surrounding the skyscrapers and other firms in the same city are the main paths through which skyscrapers affect innovation.

We study the potential negative externalities of mandatory environmental, social, and governance (ESG) disclosure. Our analysis exploits a unique regulatory change in China that requires a subset of firms to report their contributions to poverty alleviation—on top of reporting general ESG issues—using a difference-in-differences design. We find that treated firms significantly increase their anti-poverty spending, but also increase their pollution, after the regulatory change came into force. The negative environmental externality is more concentrated in firms that are more financially constrained, as well as firms that are facing fiercer market competition. We further show that this effect is driven by a firm’s incentive to strategically cater to politicians’ agenda in order to obtain preferential treatment. These findings suggest that mandating ESG disclosure in selected areas may induce firms to trade off different ESG goals by prioritizing more conspicuous ESG issues at the cost of trivializing other, longer-term, issues.

The Property Rights Theory states that clearly defined ownership is the premise of efficiency, while ambiguous property rights result in great externalities. We use the establishment of local SASACs as a quasi-natural experiment to investigate how unifying the supervision rights and responsibilities internalizes externalities and enhances SOEs’ innovation. The primary results show that the total innovation outputs and high-quality innovation outputs of SOEs governed by local SASACs (i.e., treatment group) improve after creating SASACs. The mechanism analyses show that both the pyramids level and risk-bearing level of local SOEs increase. In cross-sectional tests, we unravel that the innovation improvement effect is subject to the following five factors, including SASACs’ independence, local government quality, industry competition, SOEs managers’ motivation for promotion, and whether the SOE is in high-tech industry. Our paper provides empirical evidence for evaluating the innovation effect of the establishment of local SASACs with a quasi-natural experiment when the public ownership of SOEs does not change. Chun

In geographically segmented credit markets, local real estate booms can divert capital away from manufacturing firms, create capital scarcity, increase local real interest rates, lower real wages, and cause underinvestment and relative decline in the industrial sector. Using exogenous variation in the administrative land supply across 172 Chinese cities, we show that the predicted variation in real estate prices does indeed cause substantially higher capital costs for manufacturing firms, reduce their bank lending, lower their capital intensity and labor productivity, weaken firms' financial performance, and reduce their TFP growth by economically significant magnitudes. This evidence highlights macroeconomic stability concerns associated with real estate booms.

Although asymmetry of information and positive externalities in venture capital provide the justification for government intervention, no one can guarantee that distortion of resource allocation does not exist when government correct market failures. From the point view of incomplete contract theory, government intervention could affect the achievement of contract for the unverified information and actions, leading to inefficiency of venture capital, therefore It is important for us to understand the performance of public policy which is how to improve how to improve the venture capital. To establish the sequential offer game model with moral hazard of entrepreneur, considering with the additional funds provided by the government and certification of quality as well as the spillover effects of venture capital. Under the assumption that the government has the ability to identify high-ability entrepreneur, the introduction of government leading fund and the arrangement of control can induce more specific investment of entrepreneurs. The preceding investment provide investors with additional information, therefore it is optimal. The non-government leading fund supported entrepreneurs will face with worse situation since limited funding and the requirements of capital preservation. Therefore government leading fund should carefully select the investment strategy.

In this paper, we develop an equilibrium model for market liquidity and its impact on asset prices when constant participation in the market is costly. We show that, even when agents' trading needs are perfectly matched, costly participation prevents them from synchronizing their trades, which gives rise to the need for liquidity. Moreover, the endogenous liquidity need, when it occurs, can lead to market crashes in absence of any aggregate shock. We also show that the lack of coordination among agents in the demand and the supply of liquidity generates negative externalities, and the loss in social welfare can out-weigh the savings on participation costs.