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

Author

Listed:
  • Wenjue Zhu
  • Krishna P. Paudel
  • Sean Inoue
  • Biliang Luo

Abstract

Purpose - The purpose is to understand why contract instability occurs when small landowners lease their land to large landholders. Design/methodology/approach - The authors develop a contract theoretical model to understand the stability problem in the farmland lease contract in China, where most landowners are small landholders. Findings - Results 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/value - The 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.

Suggested Citation

  • Wenjue Zhu & Krishna P. Paudel & Sean Inoue & Biliang Luo, 2021. "Farmland lease, high-rent threat and contract instability: evidence from China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 13(4), pages 799-831, July.
    • Handle: RePEc:eme:caerpp:caer-06-2020-0142
    DOI: 10.1108/CAER-06-2020-0142
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    Cited by:

    1. Wen, Le & Paudel, Krishna P. & He, Qinying, 2023. "Temporary migration and land renting behavior," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1372-1391.

    More about this item

    Keywords

    Contract instability; Farmland lease; High-rent threat; Large renter; D81; Q13; Q15; Q18;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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