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A theory of sharecropping: the role of price behavior and imperfect competition

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  • Sen, Debapriya
Abstract
This paper proposes a theory of sharecropping on the basis of price behavior in agriculture and imperfectly competitive nature of rural product markets. We consider a contractual setting between one landlord and one tenant with seasonal variation of price, where the tenant receives a low price for his output while the landlord can sell his output at a higher price, and show the superiority of sharecropping over fixed rental contracts. Then we consider more general interlinked contracts to show that there are multiple optimal interlinked contracts. Finally, proposing an equilibrium refinement that incorporates imperfect competition in the rural product market, it is shown that the unique contract that is robust to this refinement results in sharecropping.

Suggested Citation

  • Sen, Debapriya, 2009. "A theory of sharecropping: the role of price behavior and imperfect competition," MPRA Paper 19021, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:19021
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    Cited by:

    1. Jiancai PI, 2013. "An organizational economics approach to the existence of sharecropping," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 59(11), pages 537-541.
    2. Raul V. Fabella, 2016. "Why Fixed Rent Contracts are Less Prevalent: Weak Third Party Enforcement and Endogenous Principal Type," UP School of Economics Discussion Papers 201606, University of the Philippines School of Economics.

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    More about this item

    Keywords

    Sharecropping; price variation; imperfect competition; interlinkage; the epsilon-agent;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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