To Build Outward or Upward? The Spatial Pattern of Urban Land Development in China

60 Pages Posted: 3 Jan 2017

See all articles by Zhi Wang

Zhi Wang

Fudan University - School of Economics

Qinghua Zhang

Peking University - Guanghua School of Management

Li-An Zhou

Peking University - Guanghua School of Management

Date Written: December 30, 2016

Abstract

This paper studies the determinants of the spatial pattern of urban land development. Our study is motivated by an interesting fact observed in the past decade, the fact that the fastest-growing Chinese cities have undergone outward expansion of urban land development with relatively low use intensity. We link this pattern with the career concerns of local leaders who act as city developers. We first develop a theoretical model to demonstrate how a city leader whose career advancement depends on city economic growth chooses the spatial pattern of urban land development. Two major testable predications are derived. First, city leaders with high career incentives are more likely to expand the city outward in order to boost land sale revenues for financing public infrastructure and enhancing economic growth. Second, the average use intensity of newly developed land is lower for city leaders with stronger career incentives due to the trade-off between a city’s upward and outward expansion. We test the theory using a large dataset of residential land transactions matched with city leaders from 2000 to 2012. We find robust evidence consistent with the predictions of our model.

Keywords: Urban Land Development, Spatial Patterns, Land Use Regulations, City Developer, Political Economy

JEL Classification: R1, R52, H7

Suggested Citation

Wang, Zhi and Zhang, Qinghua and Zhou, Li-An, To Build Outward or Upward? The Spatial Pattern of Urban Land Development in China (December 30, 2016). Available at SSRN: https://ssrn.com/abstract=2891975 or http://dx.doi.org/10.2139/ssrn.2891975

Zhi Wang

Fudan University - School of Economics ( email )

600 GuoQuan Road
Shanghai, 200433
China

Qinghua Zhang (Contact Author)

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

Li-An Zhou

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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