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Impact of Relationship Governance and Third-Party Intervention on Farmland Transfer Rents—Empirical Evidence from Rural China

Author

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  • Jia Chen

    (Department of Agriculture and Forestry Economics, School of Economics and Management, Nanjing Forestry University, Nanjing 210037, China)

  • Jingwen Xu

    (Department of International Trade, School of Finance and Economics, Wuxi Institute of Technology, Wuxi 214121, China)

  • Hongxiao Zhang

    (Department of Agriculture and Forestry Economics, School of Economics and Management, Nanjing Forestry University, Nanjing 210037, China)

Abstract

The marketization of transfer rent is an important symbol of the development of the farmland factor market. At present, the price formation mechanism of rent in China’s farmland market is not perfect. Based on the theoretical analysis starting with the post transaction cost of leasers, this paper uses 1648 farmland transfer samples collected by the China Land Economic Survey (CLES) in 2020, and employs OLS, 2SLS and CMP methods to empirically test the impact of relationship governance on transfer rent and the role of third-party (including county and township governments and village committees) intervention on the change in relationship governance pattern and rent decisions. The results show that the close relationship between the two sides of transfer represents the strong relationship governance functioned by the constraints of the trust and reputation mechanism, which can reduce the post transaction cost. Additionally, the two sides play a game on this part of the transaction cost, making the transfer rent lower than the market price. Furthermore, the involvement of third parties such as county and township governments and village committees in the transfer has replaced the role of relationship governance in reducing transaction cost, and changed the relationship governance pattern of acquaintance society, which makes the transfer rent close to the market price.

Suggested Citation

  • Jia Chen & Jingwen Xu & Hongxiao Zhang, 2022. "Impact of Relationship Governance and Third-Party Intervention on Farmland Transfer Rents—Empirical Evidence from Rural China," Land, MDPI, vol. 11(5), pages 1-16, May.
    • Handle: RePEc:gam:jlands:v:11:y:2022:i:5:p:745-:d:818394
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