State-owned Enterprises' Scale Orientation, Government Subsidies, and Overcapacity: An Analysis from the Perspective of Game Theory
Journal: Modern Economics & Management Forum DOI: 10.32629/memf.v6i2.3978
Abstract
This study explores the root causes of overcapacity in China, focusing on the roles of government subsidies and the scale-oriented behavior of state-owned enterprises (SOEs) in markets where SOEs and private firms coexist. Using game theory models, it finds that while subsidies may trigger short-term overcapacity, they do not cause long-term imbalance. In contrast, the persistent scale-oriented expansion of SOEs is the key driver of sustained overcapacity, as it both boosts SOE output and squeezes private firms’ capacity. The study warns that without policy correction, SOEs may eventually dominate the market entirely, exacerbating overcapacity over time.
Keywords
overcapacity, scale orientation, game theory, market strategy, government intervention
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[6]Yaoqing, F. (2021). Evolutionary game analysis of leverage manipulation of state-owned enterprises.
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