@article{Kusakari:242123,
      recid = {242123},
      author = {Kusakari, Hitoshi and Nakagawa, Satoshi},
      title = {Optimal Behavior of Rice Farmers in the Imperfectly  Competitive Land Lease Market in Japan: With a Focus on  Transaction Costs and Uncertain Returns on Land Lease  Investment},
      journal = {Japanese Journal of Rural Economics},
      address = {2013},
      number = {360-2016-18574},
      pages = {18},
      year = {2013},
      abstract = {In the process of drawing up contracts, farmers must pay  some transaction costs, including the cost for searching  for appropriate farmlands. In addition, farmers tend to  postpone making contracts because of their anxiety about  uncertain returns on land lease investment in spite of  present profitability. The objective of this study is to  judge whether transaction cost and uncertain returns work  as restrictions on the number of land lease contracts in  Japan. This study assumes that the previous papers  associated with this context overestimated the number of  the contracts because they ignored the effects of two  obstacles as a result of their preconception of the  competitive market framework. The originality of this study  is to prove the previous overestimation from theoretical  and empirical viewpoints, and to estimate the transaction  cost and the option value coefficients as an index of  uncertain returns by applying real option theory. The main  outcomes of this study are as follows: First, the study  makes it clear theoretically that the perfectly competitive  land lease market assumption adopted by the previous papers  leads to the overvaluation of the number of land lease  contracts when market competitiveness is imperfect. Second,  the study proves empirically that the land lease markets of  rice farming are imperfectly competitive according to the  significant estimation results of the transaction costs and  the option value coefficients. Third, from the estimation  results of the study, the estimate of the transaction costs  in the former period from 1981 to 1992 was relatively  larger than the estimate in the latter period from 1995 to  2002; on the other hand, the estimate of option value  coefficient in the former period was relatively smaller  than the estimate in the latter period. These results imply  that each of the two obstacles restricts the number of land  lease contracts at different periods. The empirical results  of this study strongly suggest that government policy to  mitigate both transaction costs and a degree of uncertainty  of returns on land lease investment is effective in  accelerating farmland lease contracts in rice farming in  Japan.},
      url = {http://ageconsearch.umn.edu/record/242123},
      doi = {https://doi.org/10.22004/ag.econ.242123},
}