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Antichresis leases: Theory and empirical evidence from the Bolivian experience

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  • Navarro, Ignacio
  • Turnbull, Geoffrey K.
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    Abstract

    The antichresis lease in civil law countries requires a lump sum tenant payment which is returned when the lease ends. The custody of the lump sum is the property owner's compensation. We present a theory of leases that emphasizes tenant liquidity risk and owner input moral hazard. Monthly rent leases dominate when tenant consumption depends importantly on owner supplied inputs. However, the antichresis insulates owners from tenant liquidity risk while rent contracts do not, making antichresis leases more attractive for tenant populations with greater liquidity risk. The empirical evidence from Bolivian property leases is consistent with the main model predictions.

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    Bibliographic Info

    Article provided by Elsevier in its journal Regional Science and Urban Economics.

    Volume (Year): 40 (2010)
    Issue (Month): 1 (January)
    Pages: 33-44

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    Handle: RePEc:eee:regeco:v:40:y:2010:i:1:p:33-44

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    Web page: http://www.elsevier.com/locate/regec

    Related research

    Keywords: Antichresis Anticredico Chonsei Property leases;

    References

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    1. John L. Glascock & C. F. Sirmans & Geoffrey K. Turnbull, 1993. "Owner Tenancy as Credible Commitment under Uncertainty," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 21(1), pages 69-82.
    2. Brueckner, Jan K, 1993. "Inter-store Externalities and Space Allocation in Shopping Centers," The Journal of Real Estate Finance and Economics, Springer, vol. 7(1), pages 5-16, July.
    3. Hoy, Michael & Jimenez, Emmanuel, 1991. "Squatters' Rights and Urban Development: An Economic Perspective," Economica, London School of Economics and Political Science, vol. 58(229), pages 79-92, February.
    4. Hoon Cho & James D. Shilling, 2007. "Valuing Retail Shopping Center Lease Contracts," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 35(4), pages 623-649, December.
    5. Brent W. Ambrose & Sunwoong Kim, 2003. "Modeling the Korean Chonsei Lease Contract," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 31(1), pages 53-74, 03.
    6. Miceli, Thomas J. & Sirmans, C. F. & Turnbull, Geoffrey K., 2000. "The Dynamic Effects of Land Title Systems," Journal of Urban Economics, Elsevier, vol. 47(3), pages 370-389, May.
    7. Turnbull, Geoffrey K., 2008. "Squatting, eviction and development," Regional Science and Urban Economics, Elsevier, vol. 38(1), pages 1-15, January.
    8. de Meza, David & Gould, J R, 1992. "The Social Efficiency of Private Decisions to Enforce Property Rights," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 561-80, June.
    9. Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-67, June.
    10. Thomas Miceli & C.F. Sirmans & Geoffrey Turnbull, 1998. "Title Assurance and Incentives for Efficient Land Use," European Journal of Law and Economics, Springer, vol. 6(3), pages 305-323, November.
    11. Grenadier, Steven R., 1995. "Valuing lease contracts A real-options approach," Journal of Financial Economics, Elsevier, vol. 38(3), pages 297-331, July.
    12. Miceli, Thomas J. & Sirmans, C. F., 1995. "Contracting with spatial externalities and agency problems The case of retail leases," Regional Science and Urban Economics, Elsevier, vol. 25(3), pages 355-372, June.
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    Cited by:
    1. Ignacio Navarro & Geoffrey Turnbull, 2014. "Property Rights and Urban Development: Initial Title Quality Matters Even When it No Longer Matters," The Journal of Real Estate Finance and Economics, Springer, vol. 49(1), pages 1-22, July.
    2. Kim, Jinwon, 2013. "Financial repression and housing investment: An analysis of the Korean chonsei," Journal of Housing Economics, Elsevier, vol. 22(4), pages 338-358.

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