Land tenure security law in Japan gives leaseholders a dual right: either they can renew the lease at the market rent, or they can make a claim on the landowner to purchase the premises at the market price. There is, however, a market imperfection because of the fact that leaseholders must incur a transaction cost in exercising the right of claim. Therefore, leaseholders are not full residual claimants even under land tenure security. Under this condition, we find theoretically and empirically that compared with freeholders, leaseholders are equally likely to remain in the premises, but they spend less on maintenance.
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Article provided by University of Wisconsin Press in its journal Land Economics.
Find related papers by JEL classification: K11 - Law and Economics - - Basic Areas of Law - - - Property Law R38 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Government Policies; Regulatory Policies
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