Fiscal incentive, political incentive, and strategic interaction of illegal land use by local governments

Liu, Zekun; Jiang, Caixin; Huang, Jun; Zhang, Weiwen; Li, Xuewen

doi:10.1016/j.landusepol.2023.106647

Cited by 6 publications

(1 citation statement)

References 19 publications

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“…At this point, local governments also play the role of political participants in the government arena [39][40][41][42]. Therefore, in the current institutional environment of fiscal and growth incentives in China, as monopolists in the urban land supply market, local governments have the freedom to use land as a tool for industrial competition by adjusting the mechanism of land supply, either according to market mechanisms or by favoring industrial land supply, to meet their fiscal and promotion motives [43][44][45]. In other words, facing a new round of opportunities for domestic industrial transfer, Chinese local governments have the discretion to choose land as a tool for industrial competition, deciding whether to allocate land according to market mechanisms for short-term fiscal income or to undertake industrial transfer to promote long-term local economic growth.…”

Section: Analysis Frameworkmentioning

confidence: 99%

An Evolutionary Game Analysis of Heterogeneous Local Government Land Supply Behavior and Industrial Transfer Competition

Hu,

Wang,

Zhao

2024

Systems

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The implicit assumption of homogeneity in traditional economics fails to adequately explain the complex and contradictory behavior exhibited by different local governments in China during the land supply process. The issue of land supply is characterized by practical chaos and has fallen into a theoretical research dilemma. Starting from two dimensions of heterogeneity—preferences and income—this study establishes an evolutionary game model of the limited rationality of local governments. It explores the behavioral evolution process of local governments in the context of industrial competition for land supply and its convergence trends. The research findings indicate that the land supply behavior of local governments is primarily determined by the degree of heterogeneity in preferences and income, as well as the level of compensation for losses to cooperative partners and the severity of penalties for non-cooperative behavior. If local governments’ preferences converge towards a certain threshold or if their income continually increases, they are more inclined towards cooperative behavior; otherwise, they tend to act non-cooperatively. If local governments’ revenues are heavily reliant on industrial transfers, they are more likely to engage in non-cooperative land supply behavior. This research offers theoretical insights and policy recommendations to enhance the optimal allocation of land resources in China.

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