Farmland conversion not only means reallocation of land resource, but also determines redistribution of social wealth. China’s government has obtained the major part of land revenue during farmland conversion and used for developing urban infrastructure, which provided necessary basis for China’s fast economic growth in the past decades. However, many negative effects also emerged, such as the gap between the rural and urban sectors, and the degradation of land-related ecological system.
Seeking appropriate governance structure for farmland conversion in China has thus been a practically and theoretically meaningful issue. This study applies and further develops the discrete analysis framework to the issue of governing farmland conversion and then to interpret this process via Transaction Cost Economic (TCE) theory by considering farmland conversion as a transaction or set of transactions, which forms a new way of analysing the fit or unfit of governance structure for farmland conversion. This study covers three empirical studies at two levels. The first is at national level to explain why there are different quota systems for governing farmland conversion in different countries. The second is at local level to understand why Chinese local governments would be better off sourcing-out some responsibilities for organising some farmland-conversion tasks. The third is also at local level to explain why a self-organised mode of carrying out rural-to-urban land readjustment projects has occurred in recent years in China.