Abstract
The market’s expansion into the traditional nonmarket sphere often provokes fierce opposition, and while past research has studied cultural barrier as a bar to market expansion, this paper considers the role of political forces in shaping the boundary of market. The state plays an important role in defining what kinds of goods can be traded and what kinds of organizations can be legitimate players in markets. But the state does not do so randomly, and it uses markets to fulfil the need for state building. Studying the commercialization of Buddhist temples in modern China, we found that economic performance is an important means for a state, especially one with an authoritarian regime, to obtain political legitimacy. The pursuit of utilitarian legitimacy leads the Chinese political authority to incorporate economic performance into its political promotion system, turning local government officials into “public entrepreneurs” and creating a tournament-based competition among them. The local government officials who face stronger pressure to develop the economy press temples to commercialize. In addition, Buddhist temples are more likely to abandon commercial practices if they are located in areas where the local government officials face less pressure to develop the economy.