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Game Theory in Land Use Policy

The logic behind conflicts in land acquisitions in contemporary China: A
framework based upon game theory

Since the Chinese economic reform that began in 1978, land acquisition has been a source of major controversy. Rapid urbanization has led to reallocation of land from small farmers to the government in order to satisfy increasing land demand. Local governments were also given the authority to acquire land from farmers at low costs and then sell for much higher prices.

This article analyzes payoff matrices and Nash equilibria in land negotiations between the government and farmers to gain a greater understanding of the outcomes of such negotiations. The government may either legally or illegally acquire land through oppression, and the farmers may either accept the land acquisition or revolt. The game theory analysis used to understand behavior in this land use policy is much more complicated than the simple methods used in class, creating a striking example of the uses of game theory in analysis of social and economic phenomena.

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