Abstract
Using a large, unique dataset on the Chinese housing market, we propose to measure the value of rents associated with government power using the price differences paid by bureaucrat buyers and non-bureaucrat buyers in the housing market. We find that the housing price paid by bureaucrat buyers is significantly lower than non-bureaucrat buyers, after controlling for a full set of characteristics of buyers, houses and mortgage loans. More importantly, we find that the bureaucrat price discounts exhibit salient gradients with respect to their hierarchical ranks, the criticality of their government agencies to real estate developers, and geography. Our empirical results also reveal interesting interactions of hierarchical, critical and geographical gradients of power. Our paper sheds new light on our thinking of private gains of public positions and market value of power in a broader context.
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