The precautionary regional consolidation of cities: evidence from the county-to-district reform in China

How to incentivize governments to eliminate policy-induced boundary frictions? Driven by the increased frequency of County-to-District reforms following the 2009 Province-Administering-County policy, I propose a theoretical framework highlighting the precautionary motives of prefectural governments in consolidating counties into districts. The empirical results demonstrate that precautionary consolidation is a strategic response by prefectural governments to mitigate the negative impacts of the PAC policy. Policy Implications: First, central policies that conflict with local government incentives can effectively reduce policy-induced friction. Second, career competition among officials may spur reform competition, leading to new distortions in resource allocation efficiency. © 2025 Informa UK Limited, trading as Taylor & Francis Group.