Bellemare, Marc F. (2009): The (Im)Possibility of Reverse Share Tenancy.
Download (88kB) | Preview
Under the assumption that the landlord is risk-neutral and the tenant is risk-averse, sharecropping is second-best in that it trades off risk sharing and incentives. Many, however, have reported instances of reverse share tenancy, or sharecropping in which the landlord is considerably poorer than the tenant. This note shows that reverse share tenancy is impossible under the canonical Stiglitzian model of sharecropping but becomes possible if and only if (i) both the landlord and the tenant can be assumed risk-averse; or (ii) there exist significant transactions costs making sharecropping more desirable than either a wage or fixed rent contract.
|Item Type:||MPRA Paper|
|Original Title:||The (Im)Possibility of Reverse Share Tenancy|
|Keywords:||Sharecropping; Reverse Share Tenancy; Transactions Cost|
|Subjects:||D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D86 - Economics of Contract: Theory
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q1 - Agriculture > Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development
|Depositing User:||Marc F Bellemare|
|Date Deposited:||08. Jul 2010 19:25|
|Last Modified:||16. Feb 2013 05:25|
Bellemare, M.F., 2009, Insecure Land Rights and Reverse Share Tenancy in Madagascar, Working Paper, Duke University.
Bellemare, M.F. and Z.S. Brown, 2010, On the (Mis)Use of Wealth as a Proxy for Risk Aversion, American Journal of Agricultural Economics forthcoming.
Bezabih, M., 2007, Essays on Land Lease Markets, Productivity, Biodiversity, and Environmental Variability, Unpublished PhD Dissertation, Göteborg University.
Bolton, P. and M. Dewatripont, 2005, Contract Theory. (MIT Press, Cambridge).
Dubois, P., 2002, Moral Hazard, Land Fertility and Sharecropping in a Rural Area of the Philippines, Journal of Development Economics 68, 35-64.
Ghatak, M. and P. Pandey, 2000, Contract Choice in Agriculture with Joint Moral Hazard in Effort and Risk, Journal of Development Economics 63, 303-326.
Holmström, B. and P. Milgrom, 1987, Aggregation and Linearity in the Provision of Intertemporal Incentives, Econometrica 55, 303-328.
Holt, C.A. and S.K. Laury, 2002, Risk Aversion and Incentive Effects, American Economic Review 92, 1644-1655.
Lawry, S., 1993, Transactions in Cropland Held under Customary Tenure in Lesotho, in: T.J. Bassett and D.E. Crummey, eds., Land in African Agrarian Systems (University of Wisconsin Press, Madison).
Lybbert, T.J. and D.R. Just, 2007, Is Risk Aversion Really Correlated with Wealth? How Estimated Probabilities Can Induce Spurious Correlation, American Journal of Agricultural Economics 89, 964-979.
Lyne, M.C., and D.N. Thomson, 1995, Creating Opportunities for Farmers in Communal Areas: Adapting Institutions to Promote an Efficient Rental Market in Arable Land, Unpublished Ph.D. Dissertation, University of Natal.
Pearce, R., 1983, Sharecropping: Towards a Marxist View, in: T.J. Byres, ed., Sharecropping and Sharecroppers (Frank Cass, London).
Rogerson, W.P., 1985, The First-Order Approach to Principal-Agent Problems, Econometrica 53, 1357-1368. Roumasset, J.A., 2002, The Microeconomics of Agricultural Development in the Philippines, Working Paper, University of Hawaii.
Simon, H., 1957, Models of Man. (Wiley: New York).
Singh, I., 1989, Reverse Tenancy in Punjab Agriculture: Impact of Technological Change, Economic and Political Weekly 24, A86-A92.
Stiglitz, J.E., 1974, Incentives and Risk-Sharing in Sharecropping, Review of Economic Studies 41, 219-255.
Tikabo, M.O., 2003, Land Contract Choice: Poor Landlords and Rich Tenants – Evidence from the Highlands of Eritrea, Unpublished Ph.D. Dissertation, Agricultural University of Norway.