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On Share Contracts and Screening

Author

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  • Franklin Allen

Abstract

It has been suggested by Hallagan (1978) and Newbery and Stiglitz (1979) that the coexistence of rent, wage, and share contracts generates information on the abilities of tenants which allows landlords to allocate resources more efficiently. It is argued here that despite the asymmetric information in their models, it is possible to achieve an efficient allocation of resources without the use of share contracts, by having tenants organize production. An alternative model is then given where efficiency cannot be achieved in this way because the quality of land as well as the ability of tenants is unobservable. In this case the use of sets of wage and share contracts may lead to an efficient outcome.

Suggested Citation

  • Franklin Allen, 1982. "On Share Contracts and Screening," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 541-547, Autumn.
    • Handle: RePEc:rje:bellje:v:13:y:1982:i:autumn:p:541-547
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    Citations

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    Cited by:

    1. Sen, Debapriya, 2011. "A theory of sharecropping: The role of price behavior and imperfect competition," Journal of Economic Behavior & Organization, Elsevier, vol. 80(1), pages 181-199.
    2. Juliano Junqueira Assunção, 2005. "Non-agricultural land use and land reform: theory and evidence from Brazil," Textos para discussão 496, Department of Economics PUC-Rio (Brazil).
    3. Mukhamedova, Nozilakhon & Pomfret, Richard, 2019. "Why does sharecropping survive? Agrarian institutions and contract choice in Kazakhstan and Uzbekistan," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 61(4), pages 576-597.
    4. Ananish Chaudhuri, 1997. "A Dynamic Model of Contractual Choice in Tenancy," Departmental Working Papers 199711, Rutgers University, Department of Economics.
    5. Assunção, Juliano Junqueira & Moreira, Humberto Ataíde, 2004. "Land taxes in a Latin American context," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 526, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    6. Sanjaya DeSilva, 2000. "Skills, Partnerships and Tenancy in Sri Lankan Rice Farms," Working Papers 819, Economic Growth Center, Yale University.
    7. Juliano Assunção, 2006. "Land Reform and Landholdings in Brazil," WIDER Working Paper Series RP2006-137, World Institute for Development Economic Research (UNU-WIDER).
    8. Ray, Tridip, 1999. "Share tenancy as strategic delegation," Journal of Development Economics, Elsevier, vol. 58(1), pages 45-60, February.
    9. Nozilakhon Mukhamedova & Richard Pomfret, 2019. "Why Does Sharecropping Survive? Agrarian Institutions and Contract Choice in Kazakhstan and Uzbekistan," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 61(4), pages 576-597, December.
    10. Juliano J. Assunção, 2008. "Rural Organization and Land Reform in Brazil: The Role of Nonagricultural Benefits of Landholding," Economic Development and Cultural Change, University of Chicago Press, vol. 56(4), pages 851-870, July.
    11. Wendyam Ulrich Wilfried Zombre & Emmanuelle Bouquet & Jean-Philippe Colin, 2013. "Contraintes de financement et choix contractuel sur le marché du faire-valoir indirect à Madagascar," Post-Print hal-02748863, HAL.
    12. Ananish Chaudhuri & Pushkar Maitra, 2001. "Tenant characteristics and the choice of tenurial contracts in rural India," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(2), pages 169-181.
    13. Rizov, Marian, 2002. "Agricultural Production Organization in Transition Economies and the Role of Human Capital: Evidence from Romania," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24925, European Association of Agricultural Economists.
    14. Rizov, Marian, 2005. "Human capital and the agrarian structure in transition: Micro evidence from Romania," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 26(1), pages 119-149.
    15. Debapriya Sen, 2005. "Sharecropping, interlinkage, and price variation," Department of Economics Working Papers 05-10, Stony Brook University, Department of Economics.
    16. Desilva, Sanjaya, 2000. "Skills, Partnership and Tenancy in Sri Lanka Rice Farms," Center Discussion Papers 28401, Yale University, Economic Growth Center.
    17. Kaushik Basu, 1989. "Limited Liability and the Existence of Share Tenancy," WIDER Working Paper Series wp-1989-061, World Institute for Development Economic Research (UNU-WIDER).
    18. Ananish Chaudhuri & Pushkar Maitra, 1997. "Determinants of Land Tenure Contracts; Theory and Evidence from Rural India," Departmental Working Papers 199710, Rutgers University, Department of Economics.
    19. Bernat, G. Andrew, Jr., 1987. "Share Leasing And Production Efficiency," Staff Reports 278000, United States Department of Agriculture, Economic Research Service.
    20. Agrawal, Pradeep, 1999. "Contractual structure in agriculture," Journal of Economic Behavior & Organization, Elsevier, vol. 39(3), pages 293-325, July.
    21. Eugene Canjels & Ute Volz, 2001. "Share Contracts and Unobserved Ability," SCEPA working paper series. 2001-03, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    22. Norton, Seth W., 1995. "Is franchising a capital structure issue?," Journal of Corporate Finance, Elsevier, vol. 2(1-2), pages 75-101, October.
    23. Roy, Jaideep & Serfes, Konstantinos, 2001. "Intertemporal discounting and tenurial contracts," Journal of Development Economics, Elsevier, vol. 64(2), pages 417-436, April.
    24. Muthoo, Abhinay, 1998. "Renegotiation-proof tenurial contracts as screening mechanisms," Journal of Development Economics, Elsevier, vol. 56(1), pages 1-26, June.

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