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Government Interference and the Efficiency of the Land Market in China

  • Liang Peng

    ()

  • Thomas Thibodeau

    ()

Municipal governments in China established direct control of the supply of urban land in August 2004. This paper examines whether this government action mitigates the efficiency of the residential land market. Using a unique data set of detailed land and residential community transactions with manually collected location information for residential land lots in seven Chinese cities, this paper analyzes the relationship between the land lease prices and residential property prices from the first quarter of 2001 to the fourth quarter of 2007. Results indicate that property prices determined land prices both before and after 2004:3, but the effect was significantly weaker after 2004:3. This is consistent with the hypothesis that the market for residential land became less efficient after municipal governments gained direct control of the land supply. Copyright Springer Science+Business Media, LLC 2012

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File URL: http://hdl.handle.net/10.1007/s11146-011-9300-9
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Article provided by Springer in its journal The Journal of Real Estate Finance and Economics.

Volume (Year): 45 (2012)
Issue (Month): 4 (November)
Pages: 919-938

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Handle: RePEc:kap:jrefec:v:45:y:2012:i:4:p:919-938
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  1. Daniel P. McMillen & John F. McDonald, 2002. "Land Values In A Newly Zoned City," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 62-72, February.
  2. Takatoshi Tabuchi, 1996. "Quantity Premia in Real Property Markets," Land Economics, University of Wisconsin Press, vol. 72(2), pages 206-217.
  3. Brownstone, David & De Vany, Arthur, 1991. "Zoning, Returns to Scale, and the Value of Undeveloped Land," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 699-704, November.
  4. McMillen, Daniel P., 1996. "One Hundred Fifty Years of Land Values in Chicago: A Nonparametric Approach," Journal of Urban Economics, Elsevier, vol. 40(1), pages 100-124, July.
  5. Zheng, Siqi & Kahn, Matthew E., 2008. "Land and residential property markets in a booming economy: New evidence from Beijing," Journal of Urban Economics, Elsevier, vol. 63(2), pages 743-757, March.
  6. Peiser, Richard B., 1987. "The determinants of nonresidential urban land values," Journal of Urban Economics, Elsevier, vol. 22(3), pages 340-360, November.
  7. Kau, James B. & Sirmans, C. F., 1979. "Urban land value functions and the price elasticity of demand for housing," Journal of Urban Economics, Elsevier, vol. 6(1), pages 112-121, January.
  8. Thorsnes, Paul, 2000. "Internalizing Neighborhood Externalities: The Effect of Subdivision Size and Zoning on Residential Lot Prices," Journal of Urban Economics, Elsevier, vol. 48(3), pages 397-418, November.
  9. Tzu-Chin Lin & Alan W. Evans, 2000. "The Relationship between the Price of Land and Size of Plot When Plots Are Small," Land Economics, University of Wisconsin Press, vol. 76(3), pages 386-394.
  10. Rui Wang, 2009. "The Structure of Chinese Urban Land Prices: Estimates from Benchmark Land Price Data," The Journal of Real Estate Finance and Economics, Springer, vol. 39(1), pages 24-38, July.
  11. McMillen, Daniel P., 1990. "Consistent estimation of the urban land value function," Journal of Urban Economics, Elsevier, vol. 27(3), pages 285-293, May.
  12. Colwell, Peter F & Munneke, Henry J, 1999. "Land Prices and Land Assembly in the CBD," The Journal of Real Estate Finance and Economics, Springer, vol. 18(2), pages 163-80, March.
  13. Thorsnes, Paul & McMillen, Daniel P, 1998. "Land Value and Parcel Size: A Semiparametric Analysis," The Journal of Real Estate Finance and Economics, Springer, vol. 17(3), pages 233-44, November.
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