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Government-Directed Urban Growth, Firm Entry, and Industrial Land Prices in Chinese Cities

Author

Listed:
  • Jan K. Brueckner
  • Wenhua Liu
  • Wei Xiao
  • Junfu Zhang

Abstract

We examine the effect of a large-scale administrative reorganization in China, where counties are annexed into cities to accommodate urban growth. We present a simple model to illustrate how this annexation may affect firm entry decisions and in turn land market outcomes. Using nationwide data on land-lease transactions, we find that annexation raises industrial land prices in the annexed counties by 7 percent but does not reduce land prices in neighboring counties and central cities. We show that the annexed counties experienced increases in firm entry and investment, offering a plausible mechanism for the effect on industrial land prices.

Suggested Citation

  • Jan K. Brueckner & Wenhua Liu & Wei Xiao & Junfu Zhang, 2022. "Government-Directed Urban Growth, Firm Entry, and Industrial Land Prices in Chinese Cities," CESifo Working Paper Series 10181, CESifo.
    • Handle: RePEc:ces:ceswps:_10181
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    More about this item

    Keywords

    urban growth; industrial land prices; annexation; China;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • 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
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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