Local Government Competition And Service Sector Industrial Isomorphism

This paper wants to find out the factors which influence the Local Protectionism condition in the Service Industry. Based on the study of service Local Protectionism in China under the game of local governments, the writer tries to establish two game models to find out the key factors of the service industry's Local Protectionism in China. By using the panel data model, The writer proves that the major cause of the current segmentation status of Chinese service market is not the competition of taxation under the fiscal decentralization that pointed out by some previous studies but the series of measures taken by the regional governments to win political promotion which is based on relative GDP as the key evaluation of their performance. In addition, the writer proves the measures taken by the regional governments to protect the regional service business are limited by the power of the government to control the market. At the end, the writer suggests some countermeasures on minimizing the negative effects brought by these regional service business protection measures.