Study The Economic Relationship Between Local Government And Firms Beginning With The "Zombie Firm"

In order to understand the logic and economic feasibility of local governments' "blood transfusion" to firms,starting from this basic hypothesis that local governments' "blood transfusion" to "zombie firms" is to increase net revenue and economic efficiency.Some questions about "blood transfusion" were analyzed with economic theory.Through the quantitative analysis of general conditions,the conclusion of economic theory analysis is tested.A simplified empirical study is carried out on the basic hypothesis.The equilibrium model is used to analyze how the local government's "blood transfusion" adjusts the comprehensive tax rate and its influence on the economy.Both theoretical and empirical studies have supported the basic hypothesis,and the "blood transfusion" has no conflict with the normal exit mechanism of the market,and the "blood transfusion" and "disposal" are not conflicting.Generally speaking,banks do "blood transfusions" in order to reduce the losses caused by non-performing loans,not because of local government intervention;local governments do "blood transfusions" to increase net revenues;and current business activities of firms are also normal and profitable."Blood transfusion" improves the efficiency of the use of social resources.The emergence of a "zombie firm" may be the result of overcapacity,but its survival has reduced the damage caused by overcapacity to the economy.The "blood transfusion" behavior of a local government is similar to the act of adjusting rent by a large owner of a mall.It simulates the market behavior with a clear definition of rights,can flexibly adjust the comprehensive tax rate of firms,maximizes the net revenue without destroying the enthusiasm of the firms,and makes economic efficiency the best under realistic constraints.Local governments and firms need to create a good communication environment in order to achieve the best and achieve their goals.