On the transaction values of land use rights in rural China

Land Use Rights (LURs) in China affect farmers’ productivity through investment incentives and the way land is allocated across households. LURs have implication and trade-offs between equity and growth. This paper examines how Chinese farmers might respond if the Chinese government made it legal for farmers to buy or sell LURs. Livelihood choices, labor substitution, market infrastructure, a lack of property right protections, entrepreneurship, bureaucracy, and political will are all influential factors that will determine whether such a program would work. The purpose of this paper is to examine the economics of transaction in LURs, estimate the value at which LURs could transact in equilibrium, and to analyze factors that would affect these price changes. We evaluate farmer’s intention to buy and sell LURs and how much they are willing to pay and receive for LURs.