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The economics of China’s between-city height competition: A regression discontinuity approach

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  • Lu, Jiaxuan

Abstract

In this article, I use a regression discontinuity design to quantify the race between Chinese cities to build taller skyscrapers. I begin by characterizing this height competition with a game-theoretic model for multi-stage, two-player, all-pay auctions with carryover. The dominant mixed strategy equilibrium of this dynamic game implies that a city would be more inclined to construct a taller skyscraper if its current tallest building is merely shorter than the tallest in the rival city, and this inclination is discontinuous at which the heights of these two buildings are equal. Utilizing a large data set of China’s skyscrapers constructed between 2004 and 2019, I confirm the presence of this between-city contest by empirically identifying the discontinuity in a city’s probability of constructing a taller building. I also find that this height competition has been more prevalent among the cities with fewer historic amenities or with leaders that have lower promotion likelihoods prior to the start of office.

Suggested Citation

  • Lu, Jiaxuan, 2023. "The economics of China’s between-city height competition: A regression discontinuity approach," Regional Science and Urban Economics, Elsevier, vol. 100(C).
  • Handle: RePEc:eee:regeco:v:100:y:2023:i:c:s0166046223000169
    DOI: 10.1016/j.regsciurbeco.2023.103881
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    More about this item

    Keywords

    Skyscraper; Height competition; Dynamic game; Discontinuity; China;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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