Strategic Interaction of Industrial Land Conveyance Behaviors in China: Based on an Asymmetric Two-regime Spatial Durbin Model

Abstract Intergovernmental strategic interaction has been a particular focus of research on public economics. In China, the industrial land conveyance has gradually replaced fiscal, taxation, and population policies, and has become one of the most intense fields concerning the interaction between local governments. Based on panel data collected from 275 cities between 2007 and 2015, the researchers have constructed an asymmetric two-regime Spatial Durbin Model and conducted in-depth research into the strategic interaction between local governments in industrial land conveyance, from both regional and industry perspectives. The results show that industrial land conveyance in China’s different regions and industries demonstrate diversified interactive forms, as opposed to being limited to the ‘race-to-the-bottom’ form as is generally accepted by previous research. From a regional perspective, the nationwide data results show that the strategic interaction of local governments’ industrial land conveyance behaviors is featured by ‘strengthening intervention with a complete race-to-the-bottom strategy’. The authors then divided the data into three regional categories of eastern, central, and western, with the results showing that local governments compete to intervene in industrial land conveyance, and the degree of competitive intervention strengthens from east to west, with the eastern region being characterized by ‘no strategy’, the central region ‘strengthening intervention with a strengthening strategy when neighboring cities take a weakening strategy’, and the western region ‘strengthening intervention with a complete race-to-the-bottom strategy’. From an industrial perspective, compared with labor-intensive and technology-intensive industries that have an interactive form of ‘strengthening intervention with a follow-up strengthening strategy’, local governments’ competition to intervene in the industrial land conveyance is far fiercer in capital-intensive industries which have an interactive form of ‘strengthening intervention with a complete race-to-the-bottom strategy’.