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The Economics of Sharing: A Transactions Costs Analysis of Contractual Choice in Farming

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  • Peter Murrell

Abstract

This article analyzes the reasons for the adoption of contracts in which factors receive a share of output as payment. Previous theories are unsatisfactory in that their assumptions and predictions are inconsistent with basic features of activities in which such contracts are used. A new explanation is offered based on the transactional problems of multiperiod contractual relationships. It is shown that share rents can solve transactional problems when fixed rents have high transactions costs and internal organization cannot be used because of monitoring problems.

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  • Peter Murrell, 1983. "The Economics of Sharing: A Transactions Costs Analysis of Contractual Choice in Farming," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 283-293, Spring.
    • Handle: RePEc:rje:bellje:v:14:y:1983:i:spring:p:283-293
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    Cited by:

    1. Chifeng Dai, 2009. "Wealth constraint and contractual arrangements," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 226-243, February.
    2. Brhanu , Desta & Holden , Stein T., 2018. "Variation in Output Shares and Endogenous Matching in Land Rental Contracts," CLTS Working Papers 2/18, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 16 Oct 2019.
    3. Christine Léger Léger-Bosch, 2018. "Farmland Tenure and Transaction Costs," Working Papers hal-01775201, HAL.
    4. Francine Lafontaine & Rozenn Perrigot & Nathan E. Wilson, 2017. "The Quality of Institutions and Organizational Form Decisions: Evidence from Within the Firm," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(2), pages 375-402, June.
    5. Yashodha, Y., 2018. "Bargaining and Contract Choice: Evidence from Informal Groundwater Contracts," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276035, International Association of Agricultural Economists.
    6. Mary A. Burke, 2015. "The distributional effects of contractual norms: the case of cropshare agreements," Working Papers 15-7, Federal Reserve Bank of Boston.
    7. Desilva, Sanjaya, 2000. "Skills, Partnership and Tenancy in Sri Lanka Rice Farms," Center Discussion Papers 28401, Yale University, Economic Growth Center.
    8. Lee J. Alston & Bernardo Mueller, 2010. "Property Rights, Land Conflict and Tenancy in Brazil," NBER Working Papers 15771, National Bureau of Economic Research, Inc.
    9. M. A. Taslim, 1992. "A Survey of Theories of Cropshare Tenancy," The Economic Record, The Economic Society of Australia, vol. 68(3), pages 254-275, September.
    10. Christine Léger Léger-Bosch, 2019. "Farmland tenure and transaction costs: Public and collectively owned land vs conventional coordination mechanisms in France [Régime de tenure foncière et coûts de transaction: terres publiques et c," Post-Print hal-02573765, HAL.

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