Tournament-style political competition and local protectionism: Theory and evidence from China☆

• 成果类型: Article
• 署名作者: Fang, Hanming; Li, Ming; Wu, Zenan
• 署名单位: University of Pennsylvania; National Bureau of Economic Research; The Chinese University of Hong Kong, Shenzhen; Peking University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2025.105421
• 发表日期: 2025
• 关键词: political competition; Local protectionism; Government procurement

摘要

We argue that interjurisdictional competition in a regionally decentralized authoritarian regime distorts local politicians' incentives in resource allocation among firms from their own city and a competing city. We develop a tournament model of project selection that captures the driving forces of local protectionism. The model robustly predicts that the joint presence of regional spillover and the incentive for political competition leads to biased resource allocations against the competing regions. Combining unique data sets, we test our model predictions in the context of government procurement allocation and firms' equity investment across Chinese cities. We find that, first, when local politicians are in more intensive political competition, they allocate fewer government procurement contracts to firms in the competing city; second, local firms, especially local state-owned enterprises (SOEs), internalize the local politicians' career concerns and invest less in the competing cities. Our paper provides a political economy explanation for inefficient local protectionism in an autocracy incentivized by tournament-style political competition.