Incomplete Markets, Land System And Urbanization,

It is a controversial topic whether it is reasonable to privatize rural land in the process of urbanization. With the deregulation of rural-urban migration, economies are in the state of urbanization. At the same time, markets in many developing economies are highly distorted, the situations of incomplete markets are severe and land Institutions will also have effect on urbanization so it is important to analyze the problem of choice of land institution with incomplete markets in urbanization. With incomplete markets, the land is multifunctional so that we can decompose the value of the land into three elements:the value from output as a production factor, collateral value in the private system and insurance value in the collective system. The values of land are different in the different systems, which has various effects on the market equilibrium. We build a model to compare the values of the land in different systems in urbanization with incomplete markets and furthermore propose some relevant policy suggestions on land reform among other things.