The Economics of Sharing: A Transactions Costs Analysis of Contractual Choice in Farming
AbstractThis 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.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 14 (1983)
Issue (Month): 1 (Spring)
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