Justice as efficiency: Courts and the allocation of electricity in China

Abstract

This paper explores how the justice of courts affects the allocative efficiency of electricity. We argue that courts with the justice objective will guarantee the allocative efficiency of electricity. With micro-evidence from China, we measure the allocative efficiency of electricity by the elasticity of the reliability of electricity on value added per employee in regression. We then verify that justice in courts positively moderates the elasticity of interest with robustness to the potential endogeneity bias and that corruption as a proxy for injustice has a negative moderation effect. Therefore, we document that the quality of courts determines the allocative efficiency of electricity, thereby enhancing the understanding of economic institutions for sustainable development.