The Economics of China's Between-City Height Competitions : A Regression Discontinuity Approach

This article characterizes China's between-city skyscraper contest with an infinitely-repeated game. The mixed strategy equilibrium of this dynamic game-theoretic model implies that a Chinese city would be more inclined to build a taller skyscraper if the height of its current tallest building is surpassed by the height of the rival city's tallest building, and this willingness is discontinuous at which the two cities' tallest buildings' heights are equal. Utilizing a large data set of China's skyscrapers constructed between 2004 and 2019, the regression discontinuity (RD) estimation empirically confirms the existence of this discontinuity in the probability of constructing a taller building. In view of this height competition, I identify two potential solutions to China's overbuilding problem: (i) integrating local cultural heritage into urban planning and (ii) disassociating skyscraper heights from city leaders' career advancement incentives