Land Distribution, Incentives and the Choice of Production Techniques in Nicaragua
AbstractDoes the distribution of land rights affect the choice of contractible techniques? I present evidence suggesting that Nicaraguan farmers are more likely to grow effort-intensive crops on owned rather than on rented plots. I consider two theoretical arguments that illustrate why property rights might matter. In the first the farmer is subject to limited liability; in the second the owner cannot commit to output-contingent contracts. In both cases choices might be inefficient regardless of land distribution. The efficiency loss, however, is lower when the farmer owns the land. Further evidence suggests that, in this context, the inefficiency derives from lack of commitment.
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Bibliographic InfoPaper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers with number 34.
Date of creation: Apr 2002
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Agricultural productivity; asymmetric information; crop choice.;
Other versions of this item:
- Bandiera, Oriana, 2002. "Land Distribution, Incentives and the Choice of Production Techniques in Nicaragua," CEPR Discussion Papers 3141, C.E.P.R. Discussion Papers.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
This paper has been announced in the following NEP Reports:
- NEP-AGR-2003-11-23 (Agricultural Economics)
- NEP-ALL-2003-10-28 (All new papers)
- NEP-DEV-2003-10-28 (Development)
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