Does higher market power necessarily reduce efficiency? Evidence from Chinese rice processing enterprises

This study evaluates the market power and cost efficiency of China’s rice processing firms through a stochastic frontier function. The effect on is tested using two-stage ordinary least squares method Hausman-Taylor type instrumental variable. On average, in industry have weak but high efficiency, which has been declining since 2008 global financial crisis. Firms with stronger exhibit higher contradicting quiet life hypothesis. more significant for weaker after enhancement may help save resources improving management Chinese industry.