Competing for Promotion: Effects of Three-Dimensional Government Competition on Land Misallocation in China

The government has engaged in a series of disorderly competitions around land, which contradicts urban transformation and development goals. This paper divides intergovernmental competition into three dimensions: fiscal competition between central–local governments (vertical dimension), investment competition between governments at the same level (horizontal dimension), and political performance competition between different periods of governments in the same place (temporal dimension). Utilizing panel data from 280 cities in China from 2007 to 2021, this paper uses the panel regression model, System Generalized Method of Moments (SYS-GMM) model, and spatial Durbin model to clarify the underlying reason for land misallocation in the context of economic transformation, considering both temporal and spatial perspectives. The main conclusions are as follows: three-dimensional government competition intensifies land misallocation, that is, fiscal competition intensifies land supply–demand misallocation, investment competition intensifies land price distortion, and political performance competition intensifies industrial land structure misallocation. This effect is path-dependent and varies across cities with differing levels of incentive intensity, resource endowment, and industrial agglomeration. The results of the spatial Durbin model indicate that only fiscal competition and investment competition have statistically significant negative and positive spatial spillover impacts on cities with similar economic levels, respectively. Overall, the supporting evidence demonstrates that intergovernmental competition exacerbates land misallocation. This paper aims to improve the understanding of local governments’ behavioral logic in resource allocation and to provide theoretical insights for global land governance practices.