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 offers natural experiment to assess both economic theory property rights and effectiveness, revisit rent dissipation model that was originally developed explain role unsustainable fisheries harvest decisions. We focus on evidence resource overpricing behavior context subsidized insurance, including theoretically-expected increasing pattern. Our results reinforce importance transactions costs driver inefficiency highlight social an important factor explicitly consider when designing policy. In particular, employing formal mechanism we suggest informal risk-bearing arrangements can be leveraged reduce behind increase land users’ welfare consistent with intended goals.