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We consider returns to scale in food preparation as a potential resolution of a puzzle raised by Deaton and Paxson (Journal of Political Economy, 106(5), 897–930, 1998). We clarify the conditions under which returns to scale in food preparation can resolve the puzzle. The key requirement is that foods are heterogeneous in time costs. We then show that detailed food expenditure and time use data are consistent with larger households shifting to more time intensive foods.

Firm diversification across unrelated businesses is prevalent in many emerging economies, in contrast to the practices in developed economies. A fundamental difference between these two types of economies concerns with the existence of sound economic institutions including in particular the institutions constraining government expropriation of private properties. In this paper, using a survey data set of private enterprises in China, we find that severer government expropriation in the form of higher informal levies, extralegal payments, and entertainment fees causes firms to diversify. We then provide two case studies to highlight the extra costs that China's private entrepreneurs need to bear for doing businesses, and how they can subsequently leverage their relations with government bureaucrats to diversify into various businesses. ; postprint

This paper examines the impacts of economic institutions, including property rights protection and contract enforcement, on the location choice of foreign direct investment. From a data set of 6288 US multinationals investing in various China's regions for the period of 1993-2001, it is found that US multinationals prefer to invest in those regions that have better protection of intellectual property rights, lower degree of government intervention in business operations, lower level of government corruption, and better contract enforcement. Our results are robust to alternative measures of economic institutions, different sub-samples, and different estimation strategies, and to the inclusion of control variables such as those for agglomeration economies, and other traditional factors of FDI location choice. Journal of Comparative Economics 36 (3) (2008) 412-429. © 2008 Association for Comparative Economic Studies. ; preprint

This paper, by using data from a survey of 3,073 private enterprises in China, constructs an index to quantify the power of government vis-à-vis market, which is the distinguishing feature of various models of a market economy including private orderings, private litigations through courts, and regulatory state (Glaeser and Shleifer, 2002, 2003; Djankov et al., 2003). It is found that enterprises located in regions with greater powers of government vis-à-vis market enjoy better performance, suggesting that regulatory state is an appropriate model of a market economy for China. Evidence is also presented to rule out the concern that these results are driven by rent-seeking activities. ; postprint