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The Invisible Hand and the Grabbing Hand
Abstract
Evidence from a survey of 105 shop-owners in Moscow and Warsaw shows that the reliance on private protection, as well as the burden of regulation and corruption, are much greater in Moscow. The evidence suggests that the `invisible hand' model of government better fits the Warsaw local government, and the`grabbing hand' model is more appropriate for Moscow. The evidence implies that the singular focus on the speed of economic reforms to understand the success of transition is misplaced, and that the quality of government may be as essential.
... As a result, advancement does not indicate the application of better knowledge. Subsidies are the most direct way for the government to play a "helping hand" role in the transitional economy [6]. Organizations must evolve and keep ahead of the competition to secure their long-term existence by releasing new items or services, boosting the quality of their production measures. ...
... Substitute Formula (17) for Formula (6), and the water diversion company's benefit in the event of cooperation is: ...
To depict the dynamics between the two decision-makers in the research, two models are developed: one based on game theory and the other on cooperative dynamics. Russian water delivery networks as they stand right now, with a focus on the replacement of a large chunk to prevent disastrous repercussions. Government subsidies are used to build models of cooperative and non-cooperative games using an innovative approach to financial accounting. An investigation of the Volga River Water Diversion Project in the southwest of the country is conducted to demonstrate the effectiveness of the concept. The Volga River has ongoing challenges in its ability to purify itself and provide potable water as a result of pollution and diminishing resources, similar to other significant rivers in Europe. Currently, national goal programs are being put in place to guarantee the fast development of certain regions within the Russian Federation. These programs seek to provide the best possible environment for investment to flow into different areas of regional development. In theory, the Shapley value is defined by characteristics with appealing real-world implications; hence, its application in practical settings is easily justified. The Shapley value is an important solution idea in voting games in general, and optimal water supply and income rose in tandem with the number of subsidies, while water work costs fell.
... As prior literature has demonstrated that corporate donation behavior is relevant to strategies, governance structures (Frye and Shleifer, 1997;Tan, 2002;Harrow et al., 2006;Zhang et al., 2009). Different ownership types of companies have been documented varying in these respects. ...
This paper investigates the determinants of continuity and stability of corporate philanthropy donation. By takingChinese listed companies’ donations and two earthquakes as the sample, we find that media attention, producttype, firm size, and past donation size have active effects in surveying the companies to perform the continuoussocial responsibility. Sustained and steady charitable giving depends on external pressure and internal motivation.The findings indicate that profitability, cash resource availability, and leverage will not affect the likelihood of afirms charitable giving in response to nature disaster for those who have a history of giving to disaster relief.
... When LawMicro is done well, the emphasis is not so much on how the legal process provides efficient solutions to social dilemmas, but how alternative institutional arrangements affect the ability of individuals to pursue productive specialization and realize peaceful social cooperation through exchange. The rules of the social game dictate the strategies we pursue and the results we achieve (Fuller 1965;Olson 1982;Frye and Shleifer 1997;Glaeser and Shleifer 2002;World Bank 2006;Cooter and Schäfer 2012). As Max Weber argued long ago in his General Economic History ([1923] 2023), the operative legal structure matters greatly for economic performance. ...
... First, a fair and competitive market environment is crucial. As the "invisible hand" guiding resource allocation [40], a well-functioning, open market reduces entry barriers and fosters a supportive atmosphere that encourages innovative activities. Studies have shown that a highly transparent and fair market encourages firms to engage more actively in innovation [41]. ...
This paper explores the development of digital and green collaboration, empirically examining both the linear and nonlinear impacts of the convergence of digital and green technologies on regional total factor productivity (TFP). Using data from 30 provinces and cities in China from 2010 to 2022, the study constructs a panel threshold model with business environment and intellectual property protection as threshold variables to investigate their roles in mediating the effects of digital–green technology convergence on regional TFP. The key findings are as follows: (1) The linear analysis reveals that the convergence of digital and green technologies significantly enhances regional TFP. (2) The nonlinear analysis demonstrates a nonlinear relationship between the convergence of these technologies and regional TFP. (3) The threshold effect test identifies a single-threshold effect for the business environment, showing that once the threshold is surpassed, the positive influence of the convergence of digital and green technologies on TFP increases. Additionally, a double-threshold effect is found with intellectual property protection; as intellectual property protection surpasses the first and second thresholds, the positive impact initially strengthens but then weakens. (4) A heterogeneity analysis shows that the convergence of digital and green technologies significantly contributes to TFP in the eastern regions, while the effects in central and western regions are not significant.
Extant studies on political connections document both benefits and costs for firms. In this study, we investigate whether politically connected firms pay higher taxes than their non‐connected counterparts and thus facilitate politicians to receive political benefits. Using the presidential election in Indonesia as an exogenous event, and analysing a sample of Indonesian listed firms over the period 2007–2016, we show that politicians extract resources from firms to realise their political objectives, for example, increasing tax revenues and gaining votes. We also find that politicians pursue more rent‐seeking among firms with transactional political connections. In return for over‐payment of corporate taxes, these connected firms enjoy lower cost of borrowing and higher firm value after the election year. These results are robust to the use of different regression techniques (i.e., pooled ordinary least square and probit) and tests (i.e., endogeneity, parallel trend assumption and placebo), and support the grabbing hand hypothesis of political connections. Our study contributes to the scarce literature showing that politically connected firms help politicians by providing higher tax revenues and experience a lower cost of debt and higher firm value in exchange for providing this favour to politicians.
This study investigates the relationship between district government fiscal expenditure fluctuation and asymmetric cost behaviour in China. Using the unique manual data sets of Chinese A‐listed firms during the period 2003–2018, we find that cost stickiness is a pervasive phenomenon and that fiscal expenditure fluctuation positively affects cost stickiness. The results also demonstrate this effect is more pronounced when labour input is high and the size of the population is large. In addition, our further analysis indicates that higher social welfare incomes and the higher administrative level of a city can influence these results.
We utilize a unique setting associated with the mandatory closure of the government‐to‐business revolving door to examine whether and how an exogenous rise in firm‐level political uncertainty affects the mispricing of earnings. The tension that underlies our study stems from two opposing effects. To the extent that such uncertainty can trigger opinion divergence (rational attention) among investors, it is expected to delay (accelerate) price discovery and increase (decrease) security mispricing. Our identification strategy draws on the difference‐in‐differences analysis associated with the Chinese regulation in 2013 that mandated the resignation of corporate independent directors with a government background. Consistent with the dominance of the opinion divergence effect, we observe that these involuntary resignations unintentionally increase delays in share price responses following earnings announcements. These findings are more evident among firms that enjoy more benefits from independent directors with a government background. Further analyses confirm that these involuntary resignations trigger more opinion divergence rather than rational attention among investors by showing significant increases in analyst forecast diversity but no changes in analyst coverage following such resignations. We provide novel evidence that market information efficiency could deteriorate as an unintended consequence of the escalation of firm‐level political uncertainty.
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