Abstract: This paper is based on the land value capture theory to explore the cost control mechanism of the predetermined land reserve operation model. By constructing the incentive and restraint model of predetermined land reserve, discussing the relevant parameter settings of the optimal incentive contract, it can provide a basis for the city government to reasonably control the reserve cost and achieve the financing goal. The results show that integrating supervision intensity into the incentive and restraint mechanism can reduce the degree of information asymmetry between the government and the land reserve entity. Increased incentives or strengthened supervision by the government can guide the land reserve entity towards working hard and weaken speculation, and the supervision and punishment measures can only restrain their speculation. In the case that the land reserve entity does not speculate, the government can adjust the supervision intensity according to its mastery of the type information of the land reserve main body, and the adjustment should be positively correlated with the incentive level. The government's supervision measures are conducive to increasing the income and output of the land reserve entity. The research conclusions of this paper can provide reference for relevant government departments to reasonably formulate incentive and restraint measures for predetermined land reserve and supervise the reserve entity to an appropriate extent, so as to ensure the cost control of predetermined land reserve and the realization of urban infrastructure financing goals.

Key words: predetermined land reserve, cost control, principal-agent theory, urban infrastructure financing, incentive constraint