Columns (1)–(4) in Table 2 show the results. Here, we regress the change in each type of land supply (in logarithmic form) on the fraction of two-stage auctions in that type, with the same set of controls in Table 1. Overall, a two-stage auction has a positive and significant effect on the increase of total land supply, as well as of each type of land. In Columns (5)–(8), we show the results when the dependent variable becomes the logarithm of land sales revenue. In comparison to the results based on quantity of land sales, the coefficients on corruption are dramatically reduced for residential and commercial land, whereas the reductions for total and industrial land are smaller. The effect on industrial land sales revenue becomes insignificant. Whereas corruption leads to a greater quantity of land sold, the increase in land revenue is less than proportional, suggesting that there is a price cut when there is a two-stage auction compared with other methods. The price cut is also evidenced in Cai, Henderson, and Zhang (2013), which is consistent with the “bribers’ benefits.”10 These results suggest that residential and commercial land is a major source of corruption. This is likely because residential and commercial land have much higher land prices than industrial land.11

Table 2.
Corruption and Land Supply
ln(increase in land supply)ln(land sales revenue)
TotalResidentialCommercialIndustrialTotalResidentialCommercialIndustrial
Variables(1)(2)(3)(4)(5)(6)(7)(8)
ln(population increase) 0.442*** 0.427*** 0.460*** 0.477*** 0.658*** 0.702*** 0.700*** 0.601***
(0.055) (0.066) (0.056) (0.062) (0.082) (0.085) (0.082) (0.087)
ln(increase in GDP per capita) 0.0585*** 0.0411*** 0.0701*** 0.0548*** 0.0664*** 0.0736*** 0.102*** 0.0725***
(0.011) (0.013) (0.012) (0.014) (0.014) (0.015) (0.015) (0.017)
ratio of GDPs (tertiary to secondary) −0.239** −0.161 0.124 −0.593*** 0.00858 0.127 0.475** −0.546***
(0.103) (0.122) (0.134) (0.185) (0.174) (0.174) (0.222) (0.191)
fraction of 2-stage (total) 0.838***    0.586**
(0.215)    (0.273)
fraction of 2-stage (residential)  0.765***    0.268*
(0.138)    (0.157)
fraction of 2-stage (commercial)   1.210***    0.494**
(0.210)    (0.205)
fraction of 2-stage (industrial)    0.791*    0.583
(0.456)    (0.423)
Constant 5.211*** 3.870*** −2.296*** 3.089*** 9.696*** 9.516*** 3.614*** 8.044***
(0.226) (0.228) (0.269) (0.487) (0.312) (0.272) (0.316) (0.464)
Year FE Yes Yes Yes Yes Yes Yes Yes Yes
Observations 1,438 1,437 1,437 1,429 1,409 1,437 1,425 1,429
R2 0.519 0.421 0.381 0.462 0.545 0.515 0.459 0.491
ln(increase in land supply)ln(land sales revenue)
TotalResidentialCommercialIndustrialTotalResidentialCommercialIndustrial
Variables(1)(2)(3)(4)(5)(6)(7)(8)
ln(population increase) 0.442*** 0.427*** 0.460*** 0.477*** 0.658*** 0.702*** 0.700*** 0.601***
(0.055) (0.066) (0.056) (0.062) (0.082) (0.085) (0.082) (0.087)
ln(increase in GDP per capita) 0.0585*** 0.0411*** 0.0701*** 0.0548*** 0.0664*** 0.0736*** 0.102*** 0.0725***
(0.011) (0.013) (0.012) (0.014) (0.014) (0.015) (0.015) (0.017)
ratio of GDPs (tertiary to secondary) −0.239** −0.161 0.124 −0.593*** 0.00858 0.127 0.475** −0.546***
(0.103) (0.122) (0.134) (0.185) (0.174) (0.174) (0.222) (0.191)
fraction of 2-stage (total) 0.838***    0.586**
(0.215)    (0.273)
fraction of 2-stage (residential)  0.765***    0.268*
(0.138)    (0.157)
fraction of 2-stage (commercial)   1.210***    0.494**
(0.210)    (0.205)
fraction of 2-stage (industrial)    0.791*    0.583
(0.456)    (0.423)
Constant 5.211*** 3.870*** −2.296*** 3.089*** 9.696*** 9.516*** 3.614*** 8.044***
(0.226) (0.228) (0.269) (0.487) (0.312) (0.272) (0.316) (0.464)
Year FE Yes Yes Yes Yes Yes Yes Yes Yes
Observations 1,438 1,437 1,437 1,429 1,409 1,437 1,425 1,429
R2 0.519 0.421 0.381 0.462 0.545 0.515 0.459 0.491

FE = fixed effects, GDP = gross domestic product.

Notes: Population data are from population census data in 2000 and 2010, and authors' calculations. GDP data are from City Statistics Yearbook. Land data are from the website of the Ministry of Land and Resources. Standard errors are clustered at the province level and shown in parentheses. The fraction of 2-stage (type) is the fraction of all transactions within that prefecture for that type of land (or total) that use a 2-stage auction. It is used to proxy corruption. *** = p < .01, ** = p < .05, * = p < 0.1.

Source: Authors’ calculations.

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