Private governance under public constraints

Private communities in Chinese cities are under various constraints from the government. The ex ante constraints set limits on how the homeowners association (HOA) can be designed and set up. The ex post constraints affect the operation of the HOA. It is argued that these constraints reduce the competition among private communities. However, there are also unintended benefits such as mitigating the impact of housing segregation. Our empirical study on two communities in Chongqing shows the importance of public constraints and finds that they can become an important channel for government subsidy to low-income communities.