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The effect of information structure on farmland contractual choice: toward a revised theory of share tenancy with new evidence from Guangdong, China

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  • He, Yiming
  • Collins, Alan R.

Abstract

We develop a theoretical model to identify optimal farmland contracts for lessors under different information structures. Under complete information, a fixed-rent contract is hypothesized to be the optimal institutional arrangement. Conversely, a share contract is found to be the best choice under incomplete information. Assuming that contracts between lessors and tenants from the same village operate under complete information and that contracts with tenants from outside the village operate under incomplete information, the empirical results confirm both hypotheses by showing that lessors with incomplete information have a lower probability of choosing a fixed-rent contract compared to lessors with complete information.

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  • He, Yiming & Collins, Alan R., 2021. "The effect of information structure on farmland contractual choice: toward a revised theory of share tenancy with new evidence from Guangdong, China," International Review of Law and Economics, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:irlaec:v:65:y:2021:i:c:s0144818820301629
    DOI: 10.1016/j.irle.2020.105949
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    More about this item

    Keywords

    Fixed-rent and share contracts; Information structure; Propensity score matching;
    All these keywords.

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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