Exclusion of other factors.

This study examines the potential negative effects of city-county mergers on firm-level total factor productivity (TFP). A theoretical framework is established to explain how city-county mergers could lead to higher institutional and non-institutional costs, thus influencing government decision-making and resource allocation. As a result, firms operating in the economy will absorb these costs and adjust their behavior accordingly. By employing Chinese firm-level data in a difference-in-differences approach, this study finds a statistically significant negative effect of transitioning county-level cities into municipal districts (TCD) on firm-level productivity. Additionally, this study identifies the financial situation of reformed governments and the internal environment of firms as two mechanisms through which the TCD reform influences firm-level productivity.

本研究聚焦市县合并对企业层面全要素生产率（TFP）的潜在负面影响。研究首先搭建理论分析框架，阐释市县合并如何推高制度性与非制度性成本，进而干扰政府决策与资源配置，最终使得辖区内企业需承担此类额外成本，并相应调整经营行为。基于中国企业层面微观数据，本研究采用双重差分法开展实证检验，结果显示：县级市转设市辖区（TCD）改革对企业生产率存在统计显著的负向影响。此外，本研究还识别出两类核心作用机制：一是改革后地方政府的财政状况，二是企业内部经营环境，二者共同传导TCD改革对企业生产率的影响。