Research on the Formation Mechanism of Land Mismatch

There is a distortion in the allocation of land resources in China between different uses, where the supply price of industrial land is much lower than the price of residential land, and this price distortion will lead to the wastage of resources and the reduction of efficiency. This paper explores the formation mechanism of land resource mismatch by analyzing the behavior models of supply entities and local governments in the land market. This paper finds that the more infrastructure investment in a region, the more incentive local governments have to sell industrial land at low prices to obtain industrial development and sell residential land at high prices to subsidize the supply cost of industrial land. This paper empirically examines the formation mechanism of land mismatch by choosing panel data of 95 cities from 2009 to 2022.