Pro-Manufacturing Land Policies of Competing Local Governments: A Quantitative Analysis of China
Prof. Yuta SUZUKI
Assistant Professor in Economics
Antai College of Economics and Management
Shanghai Jiao Tong University
Date: 28 November 2025 (Friday)
Time: 14:30-16:00
Venue: E22-2014
Host: Prof. Leona LI, Assistant Professor in Business Economics
Abstract
We document that local governments in China segment land markets by specifying land use, resulting in significant manufacturing land discounts relative to services and housing, especially in provinces with lower relative productivity in manufacturing. We develop a multi-sector quantitative spatial equilibrium model with free entry of firms, where local governments non-cooperatively specify land use to maximize local objectives. We find that maximizing local manufacturing output best replicates observed land pricing, particularly the negative relationship between relative land prices and relative manufacturing productivity across regions. In contrast, local-welfare-maximizing policies yield a positive relationship but still favor manufacturing, albeit less so, due to manufacturing’s stronger amplification effect through input-output linkages, with comparative advantage and trade costs influencing policy outcomes. We find that current land policies reduce national welfare by 2.2% compared to a scenario of equal land prices across uses, while local-welfare-maximizing policies yield gains close to the cooperative equilibrium of 3.7%.
Speaker
Prof. Yuta SUZUKI is an Assistant Professor of Economics at Shanghai Jiao Tong University. He received his Ph.D. in Economics from Pennsylvania State University. His research focuses on spatial economics and international trade, applying quantitative approaches to topics such as demographic change, local government policies, and environmental policy. His work has been published in the Journal of Development Economics.
All are welcome!
