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Chinese Rural Public Goods Supply by State and Community during Transition Period - A Transaction Cost Politics Perspective

With a survey of the suppliers and their behaviors of rural public goods during Chinese transition period, the paper reports on a case study into feasibility of a common governance model. By constructing a principle agent model for multimissions, the study illustrates that the opportunism inclination of local officials is due to the lack of incentive to supply rural public goods which mission is difficult to measure. With the economic behavior embedded intensively in social network, the paper shows community can be the substitute for government filling in the deficiency of government supply by self-organization. From the theory of transaction-cost politics, the study explores the frontier of common governance model by the state (government) and community to prevent free-ride