| Agriculture is a nation's a fundamental industry. The circulation of the right of contracted management of rural land is highly valued by Chinese government under the new socialist countryside construction and modern agriculture development for the reason that cultivated land circulation plays an essential part in the optimized configuration of rural land resources, in the realization of scale managed agriculture and in the improvement of farmers'income. However problems still exists which include non-standard circulation progress, infringement of farmers'interests and rights, and low leveled marketization.Into the analysis of land circulation this paper introduces principal-agent theory, based on which main issues on land circulation are studied in order to blaze new trails to promote circulation efficiency. In the investigation of current land circulating principal-agent theory is adopted to analyze the relationship among farmers, rural collective economic organizations and non-agricultural owners, reveal principal-agent issues on land circulation in China, and offer suggestions which involve establishing the incentive and restraining mechanism for the purpose of propelling standardized land circulating and promoting economic development.This paper can be divided into four sectors.The first part deals with theme background and significance, aiming at basic theories. Cultivated land circulation is an objective requirement of improving Household Contract Responsibility System and propelling modern agriculture. Adopting principal-agent theories into land circulation is of great significance in studying the constraints on Chinese rural land circulation. Taken the theoretic basis of property right theory and principal-agent theory and the framework of principal-agent theory which is specially used in information economics arguments, this paper makes analysis on the principal-agent relationship of entities in Chinese rural land circulation and establishes the incentive and restraining mechanism.The second part works over the principal-agent relationship analysis, based on which an argument is put forward that principal-agent relationship really exists among farmers, rural collective economic organizations and non-agricultural owners due to the existence of the asymmetry of contract relations and information and inconformity of interest structure. Then different types of principal-agent relationship are listed, among which one that takes rural collective economic organizations as the intermediate agent was further studied.The third part highlights principal-agent problem in land circulation from cases'phenomenon, causes and demonstrations. The coincidence of collective economic organizations and basic-level autonomous organizations often leads to the infringement of farmers rights while the inconformity of interests targets results in cultivated land conversion by the non-agricultural owner and rights infringement. Meanwhile the paper argues why principal-agent problem come into reality from several aspects which include imperfection of the incentive and restraining mechanism, lack of professional intermediate agents, inappropriateness of government role orientation and inadequacy of relevant laws and regulations. Then the paper presents a demonstration of a principal-agent problem in the land circulation by means of principal component analysis to provide data support for principal-agent issues studying.The final part specifies the suggestions and solutions towards principal-agent problem on rural land circulation in China. Followed the analysis presented above, the suggestions may involved establishing principal-agent mechanism, encouraging marketing intermediate organizations, optimizing government capabilities and improving laws and regulations. Also in the paper an elementary model of incentive and restraining mechanism is conceived based on the information economics thinking of incentive compatibility constraint and participation constraint. |
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