Contract Duration and the Division of Labor in Agricultural Land Leases
AbstractShort-term contracts provide weak incentives for durable input investment if post-contract asset transfer is difficult. Our model shows that when both agents provide inputs, optimal contract length balances weak incentives of one agent against the other. This perspective broadens the existing contract duration literature, which emphasizes the tradeoff between risk sharing and contract costs. We develop hypotheses and test them based on private grazing contracts from the Southern Great Plains. We find broad support for the implications of our model. For example, landowners provide durable land-specific inputs more often under annual versus multiyear contracts.
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Bibliographic InfoPaper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2005-6.
Length: 39 pages
Date of creation: May 2005
Date of revision:
land lease contracts; moral hazard; contract duration; division of labor.;
Other versions of this item:
- Yoder, Jonathan & Hossain, Ishrat & Epplin, Francis & Doye, Damona, 2008. "Contract duration and the division of labor in agricultural land leases," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 714-733, March.
- Jonathan Yoder & Ishrat Hossain & Francis Epplin & Damona Doye, 2005. "Contract Duration and the Division of Labor in Agricultural Land Leases," Working Papers 2005-5, School of Economic Sciences, Washington State University.
- Jonathan Yoder & Ishrat Hossain & Francis Eppin, 2005. "Contract Duration and the Division of Labor in Agricultural Land Leases," Others 0506011, EconWPA.
- J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
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