This paper explores two political factors for theirpotential effects on urban land supply in China: corruption, and competitionfor promotion. We find that standard urban economic predictions hold in thesense that both population and income increases are strongly significantdeterminants for the increase in urban land supply. Conditional on thesedemand-side factors, we find that the usage of two-stage auctions (as a proxyfor corruption) is highly correlated with the increase in land supply. Thecorruption effects are strongest for commercial land, followed by residentialland and then industrial land. To shed light on the competition motives amongprefectural leaders, we examine how the number of years in office affects landsupply, and distinguish among different hypotheses. Our empirical results showrobust rising trends in land sales (both in quantity and revenue). Theseresults are consistent with the hypothesis that the impatience and anxiety inlater years from not being promoted may contribute to the increase in landsales revenue in later years; they are inconsistent with the hypothesis thatprefectural leaders may give up and become more corrupt in later years. We alsofind that prefectural leaders may aim for larger land sales revenue overall inthe first few (around 5) years in office instead of larger revenue in the firstcouple years.
Land supply, China, Political factors, Institution, Monocentric-city model
Asian Studies | International Economics | Regional Economics
Singapore Management University, SMU Economics and Statistics Working Paper Series, Paper No. 07-2017
City or Country
Wen-Tai HSU; LI, Xiaolu; TANG, Yang; and WU, Jing.
Determinants of urban land supply in China: How do political factors matter?. (2017). 1-33. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/1929
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