<p>The competition among Chinese local governments for resources has resulted in land resource misallocation, necessitating the reinforcement of anti-monopoly and anti-unfair competition measures and accelerating the construction of a unified national market. Utilizing panel data from Chinese 282 prefecture-level cities between 2009 and 2021, we employ fixed-effects and mediation models to investigate the impact of local government competition on land resource misallocation and its underlying causal mechanisms. It demonstrates the necessity of constructing a unified national market and proposes corresponding strategies for its construction. We reveal that for each one-unit increase in local government competition, the degree of land resource misallocation rises by 0.306. Mechanism analysis indicates that competition among local governments can indirectly aggravate land resource misallocation by attracting capital agglomeration and labor mobility. Further analysis shows that the aggravated effect of local government competition on land resource misallocation is relatively pronounced in relatively developed, small and medium-sized, and strong competitive regions. Based on our findings, we advocate for accelerating the construction of a unified national market and eliminating the hidden market barriers that obstruct the free flow of resources. This study offers critical empirical evidence for regulating competition among local governments and optimizing the allocation of land resources.</p>