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.
Highlights
Incomplete contract forms will cut down the investment incentives of land market players for the insufficient legal effects, which may lead to low market efficiency [1,2,3].An incomplete contract form is mainly one without a formal written contract or legal notarization, which may bring about the incompleteness of land rights and the missing security of land rights transactions, causing these to lack legal protection
For ensuring transparency and openness of the rural collective construction land (RCCL) market, the Nanhai district government established a collective asset trading model was formalized in the draft Regulation and Administration for the Management of Collective Construction Land Use Rights Transfer in Guangdong Province in 2005, the Decree of Guangdong Provincial Government, Serial No 100, which set up Nanhai as experimental base of the RCCL market transaction
There are different transaction rules for different market models, how to choose low transaction costs and high efficient RCCL market model is key to land use revenue, land use efficiency, land allocation efficiency and land use sustainability for the supply side
Summary
Incomplete contract forms will cut down the investment incentives of land market players for the insufficient legal effects, which may lead to low market efficiency [1,2,3]. The demand side made the choice of the land rental market, which, in turn, inhibited the exclusive use of land capital specificity in the RCCL market for the supply side (the rural collective economic organization) [3]. An appropriate land model is the key to decreasing transaction specificity and uncertainty in order to reduce land transaction costs and improve the sustainability of the rural land market. This article is to understand how transaction attributes in the RCCL market affect the functioning of land sales and rental market, which can help to design informed policies to promote sustainable land management.
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