| During the past decades, China's overlapping system of jurisdictions has evolved towards strengthening the prefecture level and promoting rural-urban integration, through the spread of the regime of prefecture-level cities governing counties and the expansion of cities by incorporating county-level jurisdictions into urban districts. Recently, there has been growing debate raising a number of questions: Are there too many tiers of governments and should the prefecture level be removed? Should the present rural-urban unified administration be replaced by rural-urban separate administration? Should the current system of cities governing counties be removed and should a system of provinces directly governing counties be introduced?;This thesis attempts to develop a game-theoretic framework to answer the aforesaid questions and make sense of China's jurisdictional changes by capturing the strategic interactions among stakeholders. Our models highlight a set of tradeoffs related to the different designs of jurisdictional systems. The tradeoffs include the administrative costs in running different jurisidictional systems, the danger of government predation and overtaxation caused by too many tiers of governments, inter-jurisdictional market barriers induced by local protectionism, the economies of scale in the provision of public goods and the cost resulting from divergent preference heterogeneity. Taking into account China's geographic and institutional landscape, this thesis shows how these tradeoffs vary across space and time, resulting in different choices of jurisdictional systems. Furthermore, the study also explores the distributional effects of jurisdictional changes by identifying the gainers and losers when different systems of jurisdictions are introduced.;Our study arrives at a set of findings. One system may not be always "better" than the other given the different geographic and economic conditions. The policy choice may be further complicated by the fact that the interests of different stakeholders does not coincide in general, resulting in widely observed conflicts between them. Aside from providing a better understanding of the forces driving the jurisdictional changes as well as their distributional consequences, these findings bear policy implications in designing China's future jurisdictional systems. Besides, the study contributes to a strand of political economy literature that is focused on the endogenous formation and evolution of different jurisdictional systems. |
