Property Rights, Land Values and Urban Development
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Property Rights, Land Values and Urban Development

Betterment and Compensation in China

Li Tian

This book presents an analysis of betterment and compensation issues under the Land Use Rights (LURs) System in China since 1988. The topic originates from the observation of widening inequity and increasing uncertainty associated with the failure of government to adequately address betterment and compensation issues. An analytical framework of institutions and property rights is employed to examine socio-economic impacts under the LURs system, in particular, the role of the state is analyzed to explore the effects of government intervention in land markets.
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Chapter 2: The nature of land rent and land value capture

Li Tian


The classical economy regards rent as a regular payment for the use of land, as well as a specific historical social institution (the latter was particularly emphasized by Marx), which regulates the relationship between landowner and capitalist or producer (Jaèger, 2003). British classical political economist William Petty made a pioneering contribution to the theory of rent and developed a theory of value. Petty argued that all things ought to be valued by two natural denominations: land and labour. The natural rent of a land is the excess of what a labourer produces on it in a year over what he eats himself and trades for necessities (Petty, 1662). A representative of the French physiocratic school, Turgot, published his best-known work, Reflections on the Formation and Distribution of Wealth (Turgot, [1766] 2012). It argues that the surplus of agriculture products is generated from the special kind of natural productivity that is the natural gift of ‘pure products’.

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