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Farmland lease, high-rent threat and contract instability: evidence from China

Farmland lease, high-rent threat and contract instability: evidence from China The purpose is to understand why contract instability occurs when small landowners lease their land to large landholders.Design/methodology/approachThe authors develop a contract theoretical model to understand the stability problem in the farmland lease contract in China, where most landowners are small landholders.FindingsResults from the doubly robust estimation method used on randomly selected interview data from 552 households in nine provinces of China indicate that contract instability can arise endogenously when large landholders sign a contract. The authors conclude that a suitable rent control regime or contract enforcement may be necessary to promote a large-scale farmland transfer in China.Originality/valueThe authors develop a contract theoretical model and apply it to the land rental market in China. Data used are original and collected from farmers located in nine provinces of China. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png China Agricultural Economic Review Emerald Publishing

Farmland lease, high-rent threat and contract instability: evidence from China

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1756-137X
DOI
10.1108/caer-06-2020-0142
Publisher site
See Article on Publisher Site

Abstract

The purpose is to understand why contract instability occurs when small landowners lease their land to large landholders.Design/methodology/approachThe authors develop a contract theoretical model to understand the stability problem in the farmland lease contract in China, where most landowners are small landholders.FindingsResults from the doubly robust estimation method used on randomly selected interview data from 552 households in nine provinces of China indicate that contract instability can arise endogenously when large landholders sign a contract. The authors conclude that a suitable rent control regime or contract enforcement may be necessary to promote a large-scale farmland transfer in China.Originality/valueThe authors develop a contract theoretical model and apply it to the land rental market in China. Data used are original and collected from farmers located in nine provinces of China.

Journal

China Agricultural Economic ReviewEmerald Publishing

Published: Oct 19, 2021

Keywords: Contract instability; Farmland lease; High-rent threat; Large renter; D81; Q13; Q15; Q18

References