Contract design in China’s rural land rental market: Contractual flexibility and rental payments

Ziyan Yang

Journal of Economic Behavior & Organization, 2020, vol. 178, issue C, 15-43

Abstract: I study bargaining over contract arrangements—contractual flexibility and rental payments—that profoundly affects the ex-post surplus of China’s rural land rentals in the context of urban–rural separation. My theory suggests which equations should be estimated to test bargaining over multiple contractual terms. My theoretically justified empirical structure differs from conventional models and helps to explain seemingly inconsistent empirical results reported in the literature. Using transactional data collected by a new transaction-oriented sampling strategy, I draw two conclusions while also supporting my characterization of the bargaining mechanism. First, compared with renting-in partners, renting-out agents respond more strongly to non-agricultural employment uncertainty induced by urban–rural separation, which increases contractual flexibility. Second, social proximity helps non-stranger entrepreneurs obtain low-flexibility contracts without fully compensating renting-out agents, suggesting that urban–rural separation erects a social barrier to strangers that village trust lowers because social proximity and contractual flexibility are substitutes only in low-trusting environments.

Keywords: Land rentals; Rental contractual arrangements; Contractual flexibility; Chinese rural economy (search for similar items in EconPapers)
JEL-codes: O17 Q15 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268120302390
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:178:y:2020:i:c:p:15-43

DOI: 10.1016/j.jebo.2020.07.017

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().