Do outsourced machinery services improve land rental market performance in rural China? New evidence on transaction quantity and quality

Existing literature on the effects of outsourced machinery services (OMS) on land rental markets has focused primarily on transaction quantity, rarely considering transaction quality or analyzing both dimensions simultaneously. This study addresses this gap by using national panel data from China and a two-way fixed-effects model to examine the impact of OMS and the underlying mechanisms. The results show that OMS significantly increases transaction quantity and improves transaction quality, as reflected in greater contractual stability, stronger market orientation, and higher levels of formality. Mechanism analysis indicates that OMS increases transaction quantity by expanding rented-in land area through a cost-saving channel. It also enhances transaction quality through an asset-specificity channel—leading to more clearly defined rental periods and lower rental prices—and through a reconfigured social-trust channel, which promotes the use of written contracts. The effects are strongest in major grain-producing regions. These findings provide policy-relevant insights for promoting the coordinated development of land rental and agricultural machinery service markets.