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Market Failure and Japanese Farmland Rents

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  • P. J. Dawson

Abstract

type="main" xml:id="jage12048-abs-0001"> Since the early 1950s, Japanese farmland rents have been regulated and a consensus emerged that rent control led to market failure. Hypothesising a rent-formation model where rents are determined by prices, this paper estimates a threshold autoregressive model which integrates three tests of market failure, namely, inefficiency, bias and asymmetry. There are four results. First, a long-run relationship exists between rents and prices, and the Japanese farmland rental market is efficient. Second, the rent-price elasticity is unity and the market is unbiased. Third, rents are Granger-caused by prices which supports the rent-formation model. Fourth, asymmetry exists where more rapid error-correction occurs immediately after policy reform when rent growth exceeds price growth by 3.6% or more, and rent control has benefitted tenants.

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  • P. J. Dawson, 2014. "Market Failure and Japanese Farmland Rents," Journal of Agricultural Economics, Wiley Blackwell, vol. 65(2), pages 406-419, June.
    • Handle: RePEc:bla:jageco:v:65:y:2014:i:2:p:406-419
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    File URL: http://hdl.handle.net/10.1111/jage.2014.65.issue-2
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    Cited by:

    1. Xu, Chang & Li, Lingchao & Cheng, Baodong, 2021. "The impact of institutions on forestland transfer rents: The case of Zhejiang province in China," Forest Policy and Economics, Elsevier, vol. 123(C).

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