Casino boom and local politics: The city of Macao

This paper aims to address two closely related research questions pertaining to Macao’s strategies to develop its gaming industry. First, what is the rational gaming development strategy for the city, given the significant side effects accompanying the ongoing casino boom? Second, why is that rational strategy not being implemented? The authors develop a growth vs. side effects trade-off model to answer the two questions. Theoretically, Macao should choose a moderate strategy instead of a very aggressive one. This is, however, unlikely to happen because of the city’s malfunctioning democratic political system.