Government-directed urban growth, firm entry, and industrial land prices in Chinese cities

Authors

• Jan K. Brueckner, University of California, Irvine
• Wenhua Liu, Dongbei University of Finance And Economics
• Wei Xiao, Southwestern University of Finance and Economics
• Junfu Zhang, Clark UniversityFollow

Document Type

Article

Abstract

We examine the effects of a large-scale administrative reorganization in China, where counties are annexed into cities to accommodate urban spatial expansion. We present a simple model to illustrate how this government-directed urban growth via annexation may affect firm entry decisions and in turn land market outcomes. The key idea is that annexation indicates the direction of future urban expansion and helps coordinate expectation. Using nationwide data on land-lease transactions, we find that annexation raises industrial land prices in the annexed counties by 7% but does not reduce land prices in neighboring counties and central cities. We show that the annexed counties experienced increases in firm entry and investment, offering a plausible mechanism for the effect on industrial land prices.

Publication Title

Journal of Economic Geography

Publication Date

5-2026

Volume

26

Issue

3

First Page

399

Last Page

418

ISSN

1468-2702

DOI

10.1093/jeg/lbaf059

Keywords

annexation, China, industrial land prices, R11, R12, R14, R33, R58, urban growth

Repository Citation

Brueckner, Jan K.; Liu, Wenhua; Xiao, Wei; and Zhang, Junfu, "Government-directed urban growth, firm entry, and industrial land prices in Chinese cities" (2026). Economics. 246.
https://commons.clarku.edu/faculty_economics/246