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Land distribution, incentives and the choice of production techniques in Nicaragua

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  • Oriana Bandiera

Abstract

Does 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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File URL: http://eprints.lse.ac.uk/3545/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 3545.

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Length: 37 pages
Date of creation: Apr 2002
Date of revision:
Handle: RePEc:ehl:lserod:3545

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Related research

Keywords: Agricultural productivity; asymmetric information; crop choice.;

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References

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  1. Current, D. & Lutz, E. & Scherr, S., 1995. "Costs, Benefits, and Farmer Adoption of Agroforestry. Project Experience in Central America and the Caribbean," Papers 14, World Bank - The World Bank Environment Paper.
  2. Hart, Oliver D. & Moore, John, 1990. "Property Rights and the Nature of the Firm," Scholarly Articles 3448675, Harvard University Department of Economics.
  3. Laffont, Jean-Jacques & Matoussi, Mohamed Salah., 1988. "Moral Hazard, Financial Constraints and Sharecropping in El Oulja," Working Papers 667, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Shaban, Radwan Ali, 1987. "Testing between Competing Models of Sharecropping," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 893-920, October.
  5. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-37, October.
  6. 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.
  7. Stiglitz, Joseph E, 1974. "Incentives and Risk Sharing in Sharecropping," Review of Economic Studies, Wiley Blackwell, vol. 41(2), pages 219-55, April.
  8. Oriana Bandiera, 2000. "On the structure of tenancy contracts: theory and evidence from 19th century rural Sicily," LSE Research Online Documents on Economics 3546, London School of Economics and Political Science, LSE Library.
  9. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-98, January.
  10. Ghatak, Maitreesh & Pandey, Priyanka, 2000. "Contract choice in agriculture with joint moral hazard in effort and risk," Journal of Development Economics, Elsevier, vol. 63(2), pages 303-326, December.
  11. Dilip Mookherjee, 1995. "Informational Rents and Property Rights in Land," Boston University - Institute for Economic Development 55, Boston University, Institute for Economic Development.
  12. Braverman, Avishay & Stiglitz, Joseph E., 1986. "Landlords, tenants and technological innovations," Journal of Development Economics, Elsevier, vol. 23(2), pages 313-332, October.
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Cited by:
  1. de Laiglesia, Juan R., 2005. "Investment and credit effects of land titling and registration:," Proceedings of the German Development Economics Conference, Kiel 2005 10, Verein für Socialpolitik, Research Committee Development Economics.
  2. Luis H.B. Braido, 2005. "Evidence on the Incentive Properties of Share Contracts," Development and Comp Systems 0508013, EconWPA.

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