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The demonstration effect of transactions between strangers on those between acquaintances: evidence from land rentals in rural China

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  • Tongwei Qiu
  • Biliang Luo
  • S. T. Boris Choy
  • Xianlei Ma
  • Qinying He

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.

Suggested Citation

  • Tongwei Qiu & Biliang Luo & S. T. Boris Choy & Xianlei Ma & Qinying He, 2020. "The demonstration effect of transactions between strangers on those between acquaintances: evidence from land rentals in rural China," Applied Economics, Taylor & Francis Journals, vol. 52(43), pages 4780-4793, September.
    • Handle: RePEc:taf:applec:v:52:y:2020:i:43:p:4780-4793
    DOI: 10.1080/00036846.2020.1751051
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    Cited by:

    1. Tongwei Qiu & Xinjie Shi & Biliang Luo, 2022. "Formalizing agricultural rentals in China: Does local public action help?," Development Policy Review, Overseas Development Institute, vol. 40(4), July.
    2. Qiu, Tongwei & Shi, Xinjie & He, Qinying & Luo, Biliang, 2021. "The paradox of developing agricultural mechanization services in China: Supporting or kicking out smallholder farmers?," China Economic Review, Elsevier, vol. 69(C).
    3. Tongwei, Qiu & Luo, Biliang & Boris Choy, S.T. & Li, Yifei & He, Qinying, 2020. "Do land renting-in and its marketization increase labor input in agriculture? Evidence from rural China," Land Use Policy, Elsevier, vol. 99(C).
    4. Wang, Mingliang & Gong, Shunlong & Liang, Luyu & Bai, Li & Weng, Zhenlin & Tang, Jin, 2023. "Norms triumph over self-interest! The role of perceived values and different norms on sustainable agricultural practices," Land Use Policy, Elsevier, vol. 129(C).

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