A Study on the Transaction Costs of Farmland Expropriation on Chinese Mainland
Date Issued
2012
Date
2012
Author(s)
Chou, Li-Jen
Abstract
Since the economic reform in 1979, the Chinese government has been expropriating farmland to meet the increasing demand for land in their rapid urbanization and industrialization. Farmers whose lands were expropriated without proper compensation fought for their rights and numerous incidents occurred. This thesis thus studies the farmland expropriation on Chinese Mainland from the perspective of transaction costs with a comparison with the land expropriation system in Taiwan.
13 violations of law’s requirements for farmland expropriation are found in China in this study. All these 13 violations, according to R. H. Coase’s transaction cost theory (1937), have something to do with the increased transaction costs in farmland expropriation in China and are the cause of farmers’ fights with the authority. Based on the efficiency definition by Italian economist Vilfredo Pareto (1848-1923), this study further shows that the optimal amount of farmland expropriation in China is not reached because of these violations.
Thus in order to achieve optimal amount of farmland expropriation, reduce the transaction cost thus occurred, lower farmers’ incentive to fight with the authority and thus the number of incident, and increase social welfare, the amount of farmland expropriation has to be decreased.
Subjects
land expropriation
transaction costs
the collective ownership of land
Pareto efficiency
SDGs
Type
thesis
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