Is a Self-Organized Structure Always the Best Choice for Collective Members? A Counterexample in China’s Urban–Rural Construction Land Linkage Policy

Rapid urbanization in developing countries has widened the gap between urban and rural development, due to inefficient land markets and weak institutional systems in rural areas. China’s innovative “Urban–rural Construction Land Linkage” policy was designed to address this imbalance by encouraging rural land consolidation and creating a transferable development rights mechanism. While this approach has shown potential in improving the utilization efficiency of existing construction land and continuously supplying urban development space, concerns remain about its actual benefits to villagers and rural development, with some arguing it disrupts traditional livelihoods and favors government interests over rural needs. To respond to this debate, this study investigates two core questions: first, does China’s transferable land development rights (TDR) program genuinely improve rural welfare as intended; second, why does the theoretically preferred self-organized governance model sometimes fail in practice? To address these research questions, this paper develops a new analytical framework combining the IAD framework of Ostrom with the hierarchical institutional framework of Williamson to examine three implementation approaches in China’s TDR implementation: government-dominated, market-invested, and self-organized models. Based on case studies, surveys, and interviews across multiple regions, this study reveals distinct strengths and weaknesses in each approach in improving villagers’ lives. Government-dominated projects demonstrate strong resource mobilization but limited community participation. Market-based models show efficiency gains but often compromise equity. While self-organized initiatives promise greater local empowerment, they frequently face practical challenges including limited management capacity and institutional barriers. Furthermore, this study identifies the preconditional institutional environment necessary for successful self-organized implementation, including clear land property rights, financial support, and technical assistance. These findings advance global understanding of how to combine efficiency with fair outcomes for all stakeholders in land governance, which is particularly relevant for developing countries seeking to manage urban expansion while protecting rural interests.