On October 20, 2016, Prof. Shan-jun Li from Cornell University, gave a report entitled “Local Protectionism, Market Structure, and Social Welfare: China’s Automobile Market” at CEEP-BIT. The report was hosted by associate professor Yu Hao, some other teachers and students attended the report.

　　In this report, Prof. Shan-jun Li analyzed the local protectionism, market structure and social welfare in China’s automobile market. He thinks that there still exist widespread interregional trade barriers, such as policies and practices that protect local firms against competition from non-local firms. His study documented the presence of local protectionism and quantifies its impacts on market competition and social welfare in the context of China’s automobile market. His team found that joint ventures (JVs) and especially state-owned enterprises (SOEs) command much higher market shares in their headquarter province than at the national level. This pattern is not driven by differences in consumer preference or dealer network and point to local protectionism such as subsidies of local brands as the leading contributing factor. They set up and estimate a market equilibrium model to quantify the impact of local protectionism, finding that local protectionism leads to significant consumer welfare loss arising from choice distortions while benefits JVs and SOEs. In the long run, local protectionism could have important impacts on market structure such as firm entry and exit as well as resource allocation across regions.
　　Prof. Shan-jun Li is the associate professor of Dyson School of Applied Economics and Management, Cornell University, and also the director of Cornell Institute for China Economic Research. He is interested in environmental and energy Economics, empirical industrial organization and applied econometrics. Now he is the co-editor of Journal of the Association of Environmental and Resource Economists, associate editor of Resource and Energy Economics, and also the member of the editorial board for Journal of Environmental Economics and Management. 

　　After this lecture, teachers and students from CEEP-BIT had a heated discussion with Prof. Li and had a picture taken together.