Abstract: By making use of the provincial panel data 1998-2012, this paper conducts an analysis of the impact of local government competition on the different regional factors and the scale of industry transfer. The study reveals that the inter-regional industrial transfer occurred since 1998 in China not only has certain geographical features, but also is significantly affected by the local government competition; the enterprises have very strong motivation in pursuit of the local governments’ policy support when they are reselecting locations. Under the conditions of not considering other influencing factors, when local tax burden rises by 1%, the scale of the regional industrial transfer will decrease by 0.014%; when the public goods supply of the local government rises by a unit, the scale of regional industry transfer will be led to increase by 0.01%; when the institutional environment optimization degree improves by 1%, the scale of regional industrial transfer will increase by 0.034%. The comparison can reveal that optimization of the institutional environment is of great significance among the many variables of government competition affecting the scale of local industry transfer. During the process of attracting actively high-end industries from surrounding areas, the local governments have to pay more attention to the local systems and other software environment constructions.

Key words: governmental competition; factor mobility; industrial transfer; location reselection