Refining the Rent Dissipation Model in Land Use: Application to Agricultural Insurance in China
Despite apparent efficiency concerns, the use of agricultural insurance as a policy tool has surged in rural China. Its use offers a natural experiment to assess both economic theory of property rights and agricultural policy effectiveness, and to revisit the rent dissipation model that was original...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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MDPI AG
2023-01-01
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| Series: | Land |
| Subjects: | |
| Online Access: | https://www.mdpi.com/2073-445X/12/2/278 |
| _version_ | 1797619910149406720 |
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| author | Chao Hu Damian C. Adams Huachao Feng Jing Cheng |
| author_facet | Chao Hu Damian C. Adams Huachao Feng Jing Cheng |
| author_sort | Chao Hu |
| collection | DOAJ |
| description | Despite apparent efficiency concerns, the use of agricultural insurance as a policy tool has surged in rural China. Its use offers a natural experiment to assess both economic theory of property rights and agricultural policy effectiveness, and to revisit the rent dissipation model that was originally developed to explain the role of property rights in unsustainable fisheries harvest decisions. We focus on evidence of resource overpricing behavior in the context of subsidized agricultural insurance, including evidence of a theoretically-expected increasing rent pattern. Our results reinforce the importance of transactions costs as a driver of economic inefficiency and highlight the role of social costs as an important factor to explicitly consider when designing agricultural policy. In particular, when employing the formal policy mechanism of rural agricultural insurance, we suggest that informal risk-bearing arrangements can be leveraged to reduce social costs behind apparent overpricing behavior and increase land users’ welfare consistent with intended policy goals. |
| first_indexed | 2024-03-11T08:34:45Z |
| format | Article |
| id | doaj.art-92d50b92a77e4e9ea9d79890008ab843 |
| institution | Directory Open Access Journal |
| issn | 2073-445X |
| language | English |
| last_indexed | 2024-03-11T08:34:45Z |
| publishDate | 2023-01-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Land |
| spelling | doaj.art-92d50b92a77e4e9ea9d79890008ab8432023-11-16T21:35:06ZengMDPI AGLand2073-445X2023-01-0112227810.3390/land12020278Refining the Rent Dissipation Model in Land Use: Application to Agricultural Insurance in ChinaChao Hu0Damian C. Adams1Huachao Feng2Jing Cheng3School of Economics and Finance, Guizhou University of Commerce, Guiyang 550014, ChinaSchool of Forest, Fisheries and Geomatics Sciences, Food and Resource Economics Department, University of Florida, Gainesville, FL 32611, USASchool of Political Science and Law, Zhengzhou University of Light Industry, Zhengzhou 450002, ChinaSchool of Humanities and Social Science, Jiangsu University of Science and Technology, Zhenjiang 212100, ChinaDespite apparent efficiency concerns, the use of agricultural insurance as a policy tool has surged in rural China. Its use offers a natural experiment to assess both economic theory of property rights and agricultural policy effectiveness, and to revisit the rent dissipation model that was originally developed to explain the role of property rights in unsustainable fisheries harvest decisions. We focus on evidence of resource overpricing behavior in the context of subsidized agricultural insurance, including evidence of a theoretically-expected increasing rent pattern. Our results reinforce the importance of transactions costs as a driver of economic inefficiency and highlight the role of social costs as an important factor to explicitly consider when designing agricultural policy. In particular, when employing the formal policy mechanism of rural agricultural insurance, we suggest that informal risk-bearing arrangements can be leveraged to reduce social costs behind apparent overpricing behavior and increase land users’ welfare consistent with intended policy goals.https://www.mdpi.com/2073-445X/12/2/278rent dissipation modeloverpricing behavioreconomic rentsubsidized agricultural insurance |
| spellingShingle | Chao Hu Damian C. Adams Huachao Feng Jing Cheng Refining the Rent Dissipation Model in Land Use: Application to Agricultural Insurance in China Land rent dissipation model overpricing behavior economic rent subsidized agricultural insurance |
| title | Refining the Rent Dissipation Model in Land Use: Application to Agricultural Insurance in China |
| title_full | Refining the Rent Dissipation Model in Land Use: Application to Agricultural Insurance in China |
| title_fullStr | Refining the Rent Dissipation Model in Land Use: Application to Agricultural Insurance in China |
| title_full_unstemmed | Refining the Rent Dissipation Model in Land Use: Application to Agricultural Insurance in China |
| title_short | Refining the Rent Dissipation Model in Land Use: Application to Agricultural Insurance in China |
| title_sort | refining the rent dissipation model in land use application to agricultural insurance in china |
| topic | rent dissipation model overpricing behavior economic rent subsidized agricultural insurance |
| url | https://www.mdpi.com/2073-445X/12/2/278 |
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