Local Protection, Government Regulation And Product Quality: Evidence From China

Current research for product quality regulation, mostly concentrated ingovernment regulation system problems and corresponding solutions, while productquality regulation effective research is relatively scarce. Meanwhile the studying ofgovernment regulation effective, we have ignored that our country is currently in thetransition period and the market segmentation and local protection is serious.Therefore, we use micro data for empirical analysis. Firstly we analyze theeffectiveness of government regulation of product quality, and then we add thevariable of local protection, and further analysis government regulation impact onproduct quality with enhanced local protection. That is not the major problems, butalso the main innovation of this paper. This article consists of the following sixparts：The first chapter is the introduction. In the first chapter, we mainly discussedthe research background, significance, as well as the major innovation of this overallframework and so on.The second chapter is the literature review. Mainly describes the productquality, government regulations, and related variables such as local protectionresearch.The third chapter is to study the background and the hypotheses.This chapterdescribes the status quo and a number of related issues of our current productquality, regulation system and local protection,in the end this paper concludeswith hypothesis. Product quality regulation system research mainly were introducedfrom our current product quality regulation agencies set up, China’s product qualitycontrol system of legal supervision and quality control of our products the way threeaspects. Research on China local protection were introduced from the overall trend,the main form of local protection and local protection differences between differentindustries such areas.Finally putting up hypothesis, the first hypothesis is thatgovernment regulation is conducive to the improvement of product quality; thesecond hypothesis is as the levels of protection to strengthen, the government’sinfluence on product quality control to weaken.The fourth chapter mainly designs data model and econometric models. Thischapter focuses on the detailed explanation of the empirical analysis data sourcesand model design. The fifth chapter is a core part of this paper, empirical analysis. This chapter weuse Probit model and Margins chart analysis to verify the proposed hypothesis.Through empirical analysis, we concluded that efforts to improve governmentregulation, is conducive to the improvement of product quality, hypothesis one isvalidated. Secondly, we add this variable of market environment, we find that thebetter the market environment is the weaker the local protection, the moregovernment regulation on product quality is significant, the second hypothesis isvalidates. In order to ensure the robustness of the empirical results, we use interestrate instead of the market environment as local protection indicators to regress andobtained with the same conclusion.Chapter VI is the conclusions and policy recommendations. Firstly wesummary the main issue of our paper. Through this research, we have concluded thatgovernment regulation of product quality is a significant positive impact on productquality, while joining in local protection the impact on government regulation toproduct quality will be weakened. Secondly, in order to better improve the quality ofour products, we make relevant policy recommendations:The first, we should continue to improve our product quality regulation systembuilding, while enhancing product quality legislation, and increase governmentefforts to control product quality, so as to enable enterprises to have an incentive toproduce qualified products. The second, considering the local protection against theweakening of the effectiveness of government regulation, we analyze the motivationof local protection and put forward the corresponding countermeasures. We shouldfundamentally improve our system of administrative decentralization, reform oflocal government officials incentives,promote cooperation between localgovernments, intergovernmental reach a win-win, win-win situation. Only toestablish a scientific and rational incentive system we should fundamentally changethe way of thinking of local government. what’s more we should use policy guidanceto local protection initiative to reduce the motivation, constantly develop their ownlocal markets, and gradually change the status quo of China’s market segmentation.With gradually reduce local protection, coupled with government regulation of thesystem of continuous improvement, our product quality has greatly improved.