Can the Enlargement of Intergovernmental Cooperation Alleviate Industrial Land Misallocation? Evidence from the Yangtze River Delta, China

Competition among local governments has long been recognized as a source of distortions in industrial land allocation, but whether enlarging an intergovernmental cooperation body can correct these distortions remains insufficiently understood. This study takes the enlargement of the Yangtze River Delta Cities’ Economic Coordination Conference as its empirical case, drawing on a panel of 40 prefecture-level cities in the region over 2007–2016. Industrial land misallocation is measured as the distance between the price of industrial land and its marginal product. Applying a difference-in-differences design that compares accession cities with the region’s never-treated cities, we find no evidence that the accessions alleviated industrial land misallocation, and the results are robust to alternative outcomes and specifications. The hypothesized channels do not operate as predicted: market segmentation is essentially unchanged, while local industrial agglomeration declines and city industrial structures diverge from the proportional benchmark. Two descriptive facts help interpret these null results: the cities admitted in 2010 were already close to the efficient price configuration before accession, and the Conference lacks binding instruments over land conveyance. These findings suggest that intergovernmental coordination by itself may not be sufficient to correct land misallocation; doing so would require instruments that bind land conveyance directly and membership criteria that target the misallocation that remains.