Strategizing Actors and Agents in the Functioning of Informal Property Rights : The Tragicomedy of the Extralegal Housing Market in China

How and why did property rights to collectively owned informal housing become secure at the local level in China? The security of such property rights, especially those subject to strong state interference, is significantly associated with the strategic interaction of local governments and local people. Departing from the prevailing neoliberal perspective and the credibility thesis, this paper develops a framework of institutional analysis to understand the functioning and regional variation of informal property rights. It takes the institutions-as-equilibria perspective and situates both structural and endogenous institutional variables in actors’ strategic choices. We test our conceptual framework through a multisite empirical study of small-property-right housing in China. Through game theory, archival research, and extensive fieldwork, we examine and compare the key variables contributing to the divergent fortunes of small-property-right housing in three cities: prospering in Shenzhen, selectively interfered with in Beijing, and eliminated in Sanya. Our paper also highlights the formation and adjustment of local actors’ behavioral beliefs, which are featured in a nonlinear feedback mechanism