Can Price Regulation Increase Land-Use Intensity? Evidence from China’s Industrial Land Market

51 Pages Posted: 9 Jan 2020

See all articles by Yatang Lin

Yatang Lin

Hong Kong University of Science & Technology (HKUST)

Yu Qin

National University of Singapore (NUS) - Department of Real Estate

Zoe Yang

The Chinese University of Hong Kong - CUHK Business School

Hongjia Zhu

Jinan University

Date Written: December 18, 2019

Abstract

A major part of the literature on land use regulations focuses on the residential land market. In this paper, we examine the impact of the minimum price policy on the large, but understudied, industrial land market in China. The minimum price policy aims to reduce wasteful land use in the industrial market that results from low transaction prices; it varies across counties or districts. We show that this policy increases the overall land-use intensity in the industrial market: for each additional 100 yuan increase in imposed minimum prices, the unit transaction prices range from 31.4 to 59.7 yuan higher, and the output and total factor productivity of new entrants range from 11.8% to 16.1% higher, respectively. Furthermore, we provide suggestive evidence that higher minimum prices reduce the likelihood of land lying unused post transactions, which has the effect of increasing the industrial output per unit of land.

Keywords: Land Use Regulation; Industrial Land; Minimum Price; China

JEL Classification: R52, L5, P42, O53

Suggested Citation

Lin, Yatang and Qin, Yu and Yang, Yang and Zhu, Hongjia, Can Price Regulation Increase Land-Use Intensity? Evidence from China’s Industrial Land Market (December 18, 2019). Available at SSRN: https://ssrn.com/abstract=3505834 or http://dx.doi.org/10.2139/ssrn.3505834

Yatang Lin

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Yu Qin

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Yang Yang (Contact Author)

The Chinese University of Hong Kong - CUHK Business School ( email )

7/F, Cheng Yu Tung Building
12 Chak Cheung Street, Hong Kong
Hong Kong
Hong Kong

Hongjia Zhu

Jinan University ( email )

Huang Pu Da Dao Xi 601, Tian He District
Guangzhou, Guangdong 510632
China

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