Choice of Rural Collective Construction Land Sales and Rental Markets at the Theoretical Framework of Williamson’s Transaction Costs: Evidence from Nanhai District, Guangdong Province, China

Ting Zhang, Ke Huang and Anlu Zhang
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Ting Zhang: College of Land Resources and Environment, Jiangxi Agricultural University, Nanchang 330029, China
Ke Huang: School of Economics and Management, China University of Geosciences, Wuhan 430074, China
Anlu Zhang: College of Public Administration, Huazhong Agricultural University, Wuhan 430070, China

Sustainability, 2021, vol. 13, issue 15, 1-16

Abstract: The rural collective construction land (RCCL) market imperfections, as well as informal regulations, may have contributed to high transaction costs. Well-functioning land markets play an essential role in land-use revenue, land-use efficiency, and land allocation efficiency for the rural collective economic organization (RCEO). Therefore, specific land-use patterns and detailed transaction rules for the land rental market and land sales market, respectively, make a contribution to a suitable market model with lower transaction costs and higher market efficiency. Through an empirical investigation in Nanhai District, Gungdong Province, this article builds on the theoretical framework of Williamson’s transaction costs, where the asset specificity, uncertainty, and transaction frequency have a significant influence on the RCCL market model choice. Probit model results show that (1) the RCEO prefers to choose the land sales market when the RCCL market has higher asset specificity so that the land sales market can counteract transaction costs by creating land revenue for long-term investments. Thus, the land sales market is a more appropriate choice when the trading land is a large area in a great location. (2) The rental market choice is more suitable for the RCCL market with higher transaction uncertainty. Therefore, the RCEO can detail transaction rules for the land sales and rental markets, respectively. We propose that local governments need to announce regulations for the longest contract period and the land development planning (floor area ratio, building density, floor height, etc.) of different land-use types (industrial land and commercial land) for the land sales market and the land rental market.

Keywords: transaction costs; asset specificity; transaction uncertainty; transaction frequency; rural collective construction land (RCCL); land rental market; land sales market (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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