An Institutional Economics Research On The Multiple Functions Of Rent Deposit In Traditional Chinese Land System

The traditional Chinese agrarian land system was a market-oriented evolvinginstitutional organism, composed of a multilayer structure of property rights (includingownership rights, tenancy rights, tenure rights and farming rights), and a plentifuldiversity of contracts (including rudimentary tenancy, rent deposit, rent collateral, pawnbroking, pledge/hock, mortgage, redeemable selling, finalized selling, andsupplemental payment, etc.).The rent deposit was an important element within tenant and transactioncontracts. Not only was it a means to secure rent revenue or tenant contract, butalso a pivotal institution of pricing and trading tenancy and ownership rights.Based on contract theory and property theory of the New InstitutionalEconomics, this dissertation analyzes the rent deposit convention within thetraditional land institutions by constructing a mathematical model concerning itsmultiple functions. The dissertation classifies it into three types according tofunctions:(a) basic rent deposit as rent warranty,(b) tenancy-stabilizing rentdeposit as a contractual distribution of long-run land improvement benefitbetween landlord and tenant, and (c) discounted rent deposit as inter-temporaltrade-off of rent revenue. In addition, trade-off relationships are unfoldedamong contractual variables: quantity of deposit, contracted tenant duration, andreal rate of rent. The analysis shows the great importance of rent deposit in theevolution of agricultural productivity and institutions.In summary, by dimensioning the bundle of land property rights intooperational rights and security rights, the dissertation develops a comprehensiveparadigm featuring the “continuous spectrum of properties and contracts intraditional land system”, and knitted the diversity of traditional land propertiesand contracts into it.