The demonstration effect of transactions between strangers on those between acquaintances: evidence from land rentals in rural China
- 15 April 2020
- journal article
- research article
- Published by Taylor & Francis Ltd in Applied Economics
- Vol. 52 (43), 4780-4793
- https://doi.org/10.1080/00036846.2020.1751051
Abstract
Over the last decade, introducing outer village lessees has been an important approach to increasing the marketization of land rentals in rural China. However, with large numbers of informal features among acquaintances, the effect of introducing outer village lessees is ambiguous. In this paper, data from the 2015 China Household Finance Survey are used to analyse the demonstration effect of land rentals between strangers on those between acquaintances, and land rent is used to represent the marketization of land rentals. The estimated results indicate that with the emergence of outer village lessees, lessors transacting with acquaintances are more likely to obtain high land rents and to rent out farmland for profit. Evidence shows that profit motives are the key pathway by which the presence of outer village lessees affects land rents. The analysis using the sample of lessees supports our findings. Our analysis implies that the demonstration effect exists in land rental markets, and also provides a feasible instrument for promoting market-oriented land rentals between acquaintances.Keywords
Funding Information
- keystone policy research project of National Natural Science Foundation of China (71742003)
- Major Project of National Social Science Foundation of China (19ZDA115)
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