Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94299
Authors: 
Chaudhuri, Ananish
Year of Publication: 
1997
Series/Report no.: 
Working Papers, Department of Economics, Rutgers, The State University of New Jersey 1997-11
Abstract: 
Two issues in land tenure contracts in agriculture that have vexed economists are (1) the appearance and co-existence of multiple contracts, often in adjoining plots of land and (2) the choice of a share-cropping contract because a share contract being analogous to a proportional tax, is supposed to distort incentives and lead to sub-optimal use of inputs into land as well as lower levels of investment. In this paper we develop a dynamic two period model of landlord-tenant interaction in a principal-agent framework with one sided private information. The landlord has a choice of three contracts - wage, share and rent and chooses a contract so as to maximize her own pay-off. We show that under certain realistic assumptions (1) multiple contracts can co-exist over time and (2) share-cropping can arise and persist. The driving force in the model is the rate at which the agent discounts the future.
Subjects: 
Adverse selection
Discount rate
Principal-agent model
Share-cropping
Tenurial contracts
JEL: 
D82
L14
O12
Document Type: 
Working Paper

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