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Local government land monopoly in China: The influence of land price on supply

Crawford School of Public Policy

Event details

PhD Seminar (Econ)

Date & time

Friday 17 March 2023
11.00am–12.00pm

Venue

Weston Theatre and Zoom

Speaker

Tunye Qiu

China’s current land system allows local governments to monopolise land supply, and such monopolist power also induces local governments to distort the residential land supply according to local governments’ interests. This paper uses an overlapping generation model to depict the profit maximisation behaviour of local governments. The model suggests that local governments in cities with strong economic conditions would face a lower magnitude of price elasticity of demand and would choose a higher residential land price corresponding to a lower residential land supply to achieve profit maximisation. The empirical evidence validates the theory.

Image Credit: Nanjing, China (kalafoto - stock.adobe.com).

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