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Incentives, Risk, and Agency Costs in the Choice of Contractual Arrangements in Agriculture


  • Agrawal, Pradeep


The author develops a theory of the choice of contractual arrangements in agriculture by analyzing the incentives, risk-premia, and agency (supervision and shirking) costs under different contracts using the principal-agent framework. The theory is able to explain many tenancy-related issues, such as why sharecropping can be the optimal contract even in the presence of considerable shirking by the tiller, the predominance of sharecropping and of the 50:50 output share, the coexistence of sharecropping with other contracts, and the tenancy ladder. Copyright 2002 by Blackwell Publishing Ltd

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  • Agrawal, Pradeep, 2002. "Incentives, Risk, and Agency Costs in the Choice of Contractual Arrangements in Agriculture," Review of Development Economics, Wiley Blackwell, vol. 6(3), pages 460-477, October.
  • Handle: RePEc:bla:rdevec:v:6:y:2002:i:3:p:460-77

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    References listed on IDEAS

    1. Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, vol. 35(1-2), pages 1-22, August.
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    Cited by:

    1. James Andreoni & B. Douglas Bernheim, 2009. "Social Image and the 50-50 Norm: A Theoretical and Experimental Analysis of Audience Effects," Econometrica, Econometric Society, vol. 77(5), pages 1607-1636, September.
    2. Hong Bo & Ciaran Driver, 2012. "Agency Theory, Corporate Governance and Finance," Chapters,in: Handbook on the Economics and Theory of the Firm, chapter 11 Edward Elgar Publishing.

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