State-owned Enterprises Mergers And Rent-seeking

As a major method to optimize the property-structure of the enterprises, M&A has been increasingly emphasized by industrialists, theorists and policymakers. After entering into the WTO, the Chinese state-owned enterprises should contest with the giant global corporations, and their competitive ability how to be enhanced is considering. M&A is the basic way undoubtedly. However, different from the west countries, China has lead a way which is conflict with the market economy in M&A. The purpose of this paper is to study the specialty of the M&A of the Chinese state-owned enterprises.At first, we introduce rent and rent-seeking in a simple model to analysis the multi-types of the M&A of the Chinese state-owned enterprises. The model shows that the existence of rent-seeking activities (DUP) resulting in the M&A of bankrupts, and sometime happen even more easily. The model explains it according to the economical theory that each social group maximizes their expected utility. Then we provide a simple game-theoretic rent-seeking model to study the micro-activities of the players. The model has a unique Nash equilibrium in pure strategies. It is a negative-sum game in total resources although each player can get the optimal level of his outcome. Hence, the further rent-seeking activities and the level of resources must be considerate. At last, several proposals are given according to the practical situation of the M&A of the Chinese state-owned enterprises.