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The Gradients of Power: Evidence from the Chinese Housing Market

Hanming Fang (), Quanlin Gu () and Li-An Zhou

No 20317, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using a large, unique dataset on the Chinese housing market, we propose to measure corruption using the price differences paid by bureaucrat buyers and non-bureaucrat buyers in the housing market. We find that the housing price paid by bureaucrat buyers is on average 1.05 percentage points lower than non-bureaucrat buyers, after controlling for a full set of characteristics of buyers, houses and mortgage loans. More interestingly, we find that the bureaucrat price discounts exhibit interesting gradients with respect to their hierarchical ranks, the criticality of their government agencies to real estate developers, and geography. We argue that the bureaucrat price discounts and the gradients of these discounts are unlikely to be driven by alternative explanations, thus they are evidence of corruption and measures of the market value of government power.

JEL-codes: D73 H1 O18 (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-cna, nep-tra and nep-ure
Note: PE
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Published as Hanming Fang & Quanlin Gu & Li-An Zhou, 2019. "The gradients of power: Evidence from the Chinese housing market," Journal of Public Economics, vol 176, pages 32-52.

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