The economics of China’s between-city height competition: A regression discontinuity approach

• Published in: Regional science and urban economics Vol. 100; p. 103881
• Main Author: Lu, Jiaxuan
• Format: Journal Article
• Language: English
• Published: Elsevier B.V 01.05.2023
• Subjects: China; Discontinuity; Dynamic game; Height competition; Skyscraper; Discontinuity; R33; R14; Skyscraper; Dynamic game; China; O53; Height competition; C73; R52
• ISSN: 0166-0462; 1879-2308
• DOI: 10.1016/j.regsciurbeco.2023.103881

In this article, I use a regression discontinuity design to quantify the race between Chinese cities to build taller skyscrapers. I begin by characterizing this height competition with a game-theoretic model for multi-stage, two-player, all-pay auctions with carryover. The dominant mixed strategy equilibrium of this dynamic game implies that a city would be more inclined to construct a taller skyscraper if its current tallest building is merely shorter than the tallest in the rival city, and this inclination is discontinuous at which the heights of these two buildings are equal. Utilizing a large data set of China’s skyscrapers constructed between 2004 and 2019, I confirm the presence of this between-city contest by empirically identifying the discontinuity in a city’s probability of constructing a taller building. I also find that this height competition has been more prevalent among the cities with fewer historic amenities or with leaders that have lower promotion likelihoods prior to the start of office. •Between-city skyscraper contest is characterized by a dynamic game-theoretic model.•Cities respond to their rivals’ tallest buildings in a discontinuous manner.•This discontinuity is empirical identified using the data on China’s skyscrapers.•Height competition is more common among cities with fewer historic amenities.•It is also more prevalent when city leaders have lower ex ante promotion likelihoods.