Adopting a historical institutionalist approach, this study focuses on the tobacco industry as a case study to explore why competition would happen in this state-monopoly regime from its outset and... Show moreAdopting a historical institutionalist approach, this study focuses on the tobacco industry as a case study to explore why competition would happen in this state-monopoly regime from its outset and how it evolved during the past three decades in China. I argue that the emergence of competition in the tobacco state monopoly resulted from a particular industrial governance pattern, which formed up incrementally and became strengthened via interactions between local governments and the local agents of China’s National Tobacco Corporation (CNTC). As the institutional settings where local governments and the CNTC’s local agents were embedded changed, the governance pattern and the resulting competition type continually transformed over three distinctive phases: quasi-free competition under the two-track system (1982-1993), restrained competition under prevalent local protectionism (1994-2004), and quasi-oligopoly competition under the central-led competitive monopoly (2005-2012). Tracing the development of the three phases discloses not only how local governments have already become the de facto agents for serving the CNTC but also how this circumstance has indirectly strengthened the control capacity of the monopoly, thus reinforcing and intensifying state control and the competition alike. The “state monopoly, Chinese style” was thus formed in this context. Show less
