Therighttoeachprivatelyownedresourceis,bydefinition,,theparticipatingresource,”short-term”leaseisinefficient;therelevantquestioniswhydifferentleasedurationsarechosen.
Inaworldunplicatedbytransactioncostsandrisks,inwhichtherighttotheinegeneratedbyprivateinvestmentcouldbecostlesslysecuredandtransferred,andinwhichchangesincontractualstipulationscouldbecostlesslynegotiatedatanytime,thedurati,,itisconvenienttoseparatethecostadvantagesof”long”and”short”leasedurations.
TheChoiceofRelativelyLongLeaseDuration
Arelativelylongleasedurationischosentoreducethecostoftransferring（transacting）,awaterbuffaloownedbyatenantforgraingrindingiseasierto,thelandownercouldhaveinvestedinthewaterirrigationhimself,orhecouldpurchasethetenantsmittedimprovementoutright.[5]Butwhenassetsattachedtolandareownedbythetenant,
However,thecostof,eithertoathirdpartyortothelandowner,,orcannotbeobtainedinashortperiodoftime,oevaluate;thelandownermaychoosetoselecthisnewtenant,,however,canbemadeonlyattheexpenseofsomecostadvantagewhichashorterleasedurationprovides.
TheforegoingdiscussioncanbesupportedbyobservationsontheperpetualleaseinChina:
Underperpetualleasesthelandownerholdsownershiprighttothe[bottomof]land,andthetenantownstherighttothesoil……:（1）thetenantexploited[privatelyowned]wastelandanddevelopeditintofarmland,thusgainingaperpetual[ownership]righttothesoilfromthelandowner.（2）Permanentimprovementsinlandmadebythetenant……suchasbuildingupwater-conservingdevicesinotherwisesandyfields……（3）……wherelaborisscarceandlandplentiful,thelandownersattractedtenantsfromafarbyofferingtheperpetualrighttotill[thesoil]……（4）Thetenanthadpaidalump-sumpaymenttoobtaintheperpetualrighttotill……And（5）thepeasant,wheninneedofmoney,soldt,boththelandownerandthetenantcanselltheirrightsfreely,withouttheconsentfromeachother.[6]
Ineveryinstance,thetenantsassetattachedtoland（forexample,therighttothesoil）isphysically”permanent.”Withtheperpetualleaseandthecontractedtermsineffect,thelandownermaynotarbitrarilyraisethe”bottom”rent（oruseotherdevices）ero:Ifthe”bottom”and”surface”rightswereclearlydelineatedandcostlesslyenforcedasprivate,andiftheserightscouldbecostlesslytransferred,therewouldexistmarketpricesfortheserightsatwhichtransferscouldbeexecutedatanytime.[7]Thustherewouldbenoneedforlongleasedurationstoprotectthe”immobile”
TheChoiceofRelativelyShortLeaseDuration
Theadoptionofarelativelylongleaseduratiotperiodoftime,orwhenthelandownerprovidesallthe”permanent”assets,arelativelyshortleasedurationreducesthecostsofenforcingthecontractedtermsandofrenegotiatingtheseterms.
Whenacontractisformed,thecontra,theviolationofthecontractedtermsbyeitherpartymaycallforincreasingenforcementefforts,orforrevokingthecontractbeforeitsterm,whichfacilitatestenancydismissal,,however,thefrequencyoftenancydismissalswasfarlessthanthatofshort-termleases,ldisputeswaslow.[8]Iconjecture,therefore,thatshort-termleasesarechosenmoreasadevicetofacilitatecontractualrenegotiationthanasadevicetoreducethecostsofenforcingthecontractedterms.