Farmland lease, high-rent threat and contract instability: evidence from China
China Agricultural Economic Review
ISSN: 1756-137X
Article publication date: 2 July 2021
Issue publication date: 19 October 2021
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.
Keywords
Acknowledgements
Funding: Zhu’s time on this paper was supported by the National Natural Science Foundation of China (No. 71903038). Luo’s time on this paper was supported by the National Social Science Foundation of China (No. 19ZDA115). Paudel’s time on this paper was supported by the USDA Hatch Projects #94483 and #94382.
Citation
Zhu, W., Paudel, K.P., Inoue, S. and Luo, B. (2021), "Farmland lease, high-rent threat and contract instability: evidence from China", China Agricultural Economic Review, Vol. 13 No. 4, pp. 799-831. https://doi.org/10.1108/CAER-06-2020-0142
Publisher
:Emerald Publishing Limited
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