Land market concentration, developers’ pricing decisions, and class monopoly rent in urban China

Abstract

Drawing on Harvey’s assertion on class monopoly rent, this paper investigates developers’ monopolist pricing decisions in urban China, with an additional focus on the heterogeneity between state-owned enterprises (SOEs) and private developers. By contextualizing Harvey to China’s urban political economy, we find that when developers maximize profits and local governments maximize land revenues, their individual activities forge a collective to create “island-like” markets that lead to class monopoly rents, and that local governments seek to realize social goals primarily through the operation of SOEs, making SOE developers act differently. We specify a set of hypotheses on the relationship between private developers’ monopolist pricing and their power in local secondary land markets and SOEs’ imparity. We organize a city-level, national-scale dataset and use a fixed effects model and the instrumental variable approach to test our hypotheses. This research has implications for China’s land and housing policies, and suggests that a deeper examination of the concept of class monopoly rent would facilitate a better understanding of contemporary neoliberal cities.