Property rights implications on the development of urban villages in China

Abstract

History may show that in complex social economic systems, should other conditions be controlled, different initial settings of property rights may bring different results. This thesis will test if different initial property rights settings in urban villages have resulted in different forms of housing development. Empirical data collected from three Chinese cities (Shenzhen, Guangzhou, and Xi'an) showed that the absence of clear and enforceable private property rights in these urban villages has led to high density housing developments uncontrolled by regulations. As a result, rents collected from these villages were lower, which, in turn, led to the earlier renewal of each development. The underlying mechanism is illustrated using an integrated property rights and transaction cost framework, which is testable against empirical observations. Major contributions of the thesis should include the empirical identification of different existing outcomes, the theoretical explanation of the conditions leading to variations in those outcomes, and the testing of various implications (e.g. the effect of high negotiation costs on high building density, the effect of rent increases on the promotion of legal renewals, and the effect of high policing costs on illegal projects).