Effect of land price distortion on land use efficiency: Evidence from China

Abstract

Land price distortion will not only lead to a series of economic problems such as widening regional economic gap, local government debt risk and serious ecological deterioration, but also lead to the imbalance of macro allocation of land resources and irrational spatial structure, and the land input-output efficiency will also be affected. This article studies the impact of land price distortion on China’s land use efficiency using a dataset of 103 cities in China during the years 2008–2015. The results show that there exist significant spatiotemporal disparities of land use efficiency. The land use efficiency has significant spatiotemporal differences. Empirical results document that increases in land price distortion leads to significant decreases in land use efficiency. Our findings are robust to alternative measures of land price distortion, different subsamples and instrumental variable estimations.