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How horizontal integration affects transaction costs of rural collective construction land market? An empirical analysis in Nanhai District, Guangdong Province, China

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  • Xie, Xiangxiang
  • Zhang, Anlu
  • Wen, Lanjiao
  • Bin, Peng

Abstract

High transaction costs caused by dispersed and fragmented tracts, insecure tenure and incomplete information in rural land market has become a common issue in the transition economies. Horizontal integration may economize on transaction costs but aggrandize governance inputs. Therefore trade-off between integration and governance is one of the biggest challenges in land commercialization and rural restructuring worldwide. Resorting to a field survey in Nanhai District, Guangdong Province, this work estimates how the transaction costs of rural collective construction land are influenced by the horizontal integration degree and the level of self-organization governance of collectives. Four Tobit models are constructed based on the scale of collectives and the results show that: (1) There is an almost U-shaped relationship between the horizontal integration degree of the collectives and the transaction costs. The horizontal integration among shareholders can not only centralize the fragmented land assets from individual farmers and reduce the transaction costs of rural construction land, but also result in organization costs. The transaction costs are not decreasing as the horizontal integration increases until the transaction costs saved are equal to resultant organization costs. (2) The more collective leaders, the higher organization costs and the more opportunism behaviors, which will give rise to the transaction costs. This suggests that the Chinese authorities should strengthen the ongoing efforts to reduce the transaction costs of market and improve the efficiency through a more transparent and accessible market and optimal scale of horizontal integration of the collective. Our work sheds some light on the mechanisms at play in the reform and innovation of rural grass-root governance and it contributes to a better understanding of land-based shareholding cooperation system and nature of ongoing rural construction land market in China and transitional economies.

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  • Xie, Xiangxiang & Zhang, Anlu & Wen, Lanjiao & Bin, Peng, 2019. "How horizontal integration affects transaction costs of rural collective construction land market? An empirical analysis in Nanhai District, Guangdong Province, China," Land Use Policy, Elsevier, vol. 82(C), pages 138-146.
    • Handle: RePEc:eee:lauspo:v:82:y:2019:i:c:p:138-146
    DOI: 10.1016/j.landusepol.2018.11.029
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    3. Meie Deng & Anlu Zhang & Congxi Cheng & Canwei Hu, 2022. "Are Villagers Willing to Enter the Rural Collective Construction Land Market under the Arrangement of Transaction Rules?—Evidence from Ezhou, China," Land, MDPI, vol. 11(4), pages 1-11, March.
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    7. Jiao, Man & Xu, Hengzhou, 2022. "How do Collective Operating Construction Land (COCL) Transactions affect rural residents’ property income? Evidence from rural Deqing County, China," Land Use Policy, Elsevier, vol. 113(C).
    8. Wen, Lanjiao & Chatalova, Lioudmila & Zhang, Anlu, 2022. "Can China's unified construction land market mitigate urban land shortage? Evidence from Deqing and Nanhai, Eastern coastal China," Land Use Policy, Elsevier, vol. 115(C).
    9. Wen, Lanjiao & Chatalova, Lioudmila, 2021. "Will transaction costs and economies of scale tip the balance in farm size in industrial agriculture? An illustration for non-food biomass production in Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(2).
    10. Lanjiao Wen & Lioudmila Chatalova, 2021. "Will Transaction Costs and Economies of Scale Tip the Balance in Farm Size in Industrial Agriculture? An Illustration for Non-Food Biomass Production in Germany," Sustainability, MDPI, vol. 13(2), pages 1-18, January.
    11. Cheng, Long & Brown, Gregory & Liu, Yan & Searle, Glen, 2020. "An evaluation of contemporary China’s land use policy – The Link Policy: A case study from Ezhou, Hubei Province," Land Use Policy, Elsevier, vol. 91(C).
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    14. Zou, Yucheng & Yan, Lei & Zhang, Yanwei, 2023. "Game analysis of incremental income allocation in the marketization of rural collectively-owned commercial construction land under fairness preference," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 1-14.

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