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The Economics of Sharing: A Transactions Cost Analysis of Contractual Choice in Farming
The Bell Journal of Economics
Vol. 14, No. 1 (Spring, 1983), pp. 283-293
Published by: RAND Corporation
Stable URL: http://www.jstor.org/stable/3003555
Page Count: 11
You can always find the topics here!Topics: Tenants, Landlords, Land use, Contracts, Farm economics, Opportunistic behavior, Transaction costs, Franchise agreements, Agricultural land, Economic rent
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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.
The Bell Journal of Economics © 1983 RAND Corporation