Bureaucratic Incentives and Environmental Competition
How integrating environmental protection into cadre evaluation ended China's race-to-the-bottom competition.
Rewriting the Contract: How Bureaucratic Incentives Ended China’s Race-to-the-Bottom
with Jianfu Shen and Eddie C.M. Hui
Regional Science and Urban Economics — Reject and Resubmit (Top 2 Urban Economics Journal; ABDC A)
Analyzing over 250,000 industrial land transactions from 279 cities, we find that integrating environmental protection as a criterion in the cadre evaluation system significantly mitigated the race-to-the-bottom competition in land conveyancing. Heightened environmental monitoring has led local officials to be less inclined to sell industrial land at reduced prices. Under the old GDP-centric regime, officials strategically suppressed land prices by 15.5% as they approached their five-year promotion review; after the reform, land prices in an official’s fifth year increased by 14.5%, reversing the previous downward trend.