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New Apprroaches to the Theory of Rental Contracts in Agriculture

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  • Bell, Clive
  • Zusman, Pinhas

Abstract

This paper addresses two issues: the relationship between the choice of rental contract in agriculture and the set of conditions or environment under which such contracts are arrived at, and the implications of this relationship for efficiency, equity, and development policy. Both issues have been the subject of much discussion in the theoretical literature of late. In particular, close attention has been paid to the role of imperfections in, or outright failure of, one or more markets. This has led, in turn, to the notion of "market interconnectedness" in the narrow sense that the same two agents will deal with one another in several markets simultaneously, an obvious example being the landlord who also provides credit to tenants. Two main analytical approaches are discernible. The first posits free entry for an indefinitely large set of agents who have access to parametrically given alternative utility levels elsewhere in the economy. The resulting equilibria are normally characterized by utility equivalent contracts, which are the outcome of a Nash noncooperative game. The second assumes barriers to entry in the face of market failure so that, in equilibrium, the set of contracts is the outcome of a system of Nash cooperative games. Taken together they yield a rich taxonomy and a number of interesting results.

Suggested Citation

  • Bell, Clive & Zusman, Pinhas, 1981. "New Apprroaches to the Theory of Rental Contracts in Agriculture," 1981 Occasional Paper Series No. 2 197142, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaaeo2:197142
    DOI: 10.22004/ag.econ.197142
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    References listed on IDEAS

    as
    1. Joseph E. Stiglitz, 1974. "Incentives and Risk Sharing in Sharecropping," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(2), pages 219-255.
    2. Bell, Clive & Zusman, Pinhas, 1976. "A Bargaining Theoretic Approach to Cropsharing Contracts," American Economic Review, American Economic Association, vol. 66(4), pages 578-588, September.
    3. William Hallagan, 1978. "Self-Selection by Contractual Choice and the Theory of Sharecropping," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 344-354, Autumn.
    4. David M. G. Newbery, 1977. "Risk Sharing, Sharecropping and Uncertain Labour Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 585-594.
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    Cited by:

    1. Poray, A., 1983. "The Land Resource: A Look At Recent Agricultural Rents In South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 22(2), October.
    2. Tyagi, Ashish & Himanshu, Himanshu, 2011. "Tenancy in Palanpur," LSE Research Online Documents on Economics 38374, London School of Economics and Political Science, LSE Library.
    3. Netanyahu, Sinaia & Mitra, Siddhartha & Just, Richard E., 1995. "Behavioral Risk: An Explanation of Contracts in the Broiler Industry," Working Papers 197832, University of Maryland, Department of Agricultural and Resource Economics.
    4. Laha, A. & Kuri, P.K, 2008. "Productivity Differences under Alternative Tenurial Contracts in Agriculture and Access to Credit: Evidence from Rural West Bengal, India," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 10, pages 1-18.
    5. Bharadwaj K., 1989. "Formation of rural labour markets: an analysis with special reference to Asia," ILO Working Papers 992679613402676, International Labour Organization.

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