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Cost-Sharing Arrangements under Sharecropping: Moral Hazard, Incentive Flexibility, and Risk

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  • Avishay Braverman
  • Joseph E. Stiglitz

Abstract

This paper explains the rationale and describes the characteristics of cost sharing arrangements in rural developing economies, focusing on the risk and incentive properties of alternative cost contracts and on their flexibility—their ability to adapt to environmental changes. It is shown that where labor inputs are difficult to monitor, the rule that cost shares and output shares be equalized will not hold and is not "constrained pareto efficient," and that cost-sharing contracts have a decided advantage over contracts which specify the level of inputs whenever there are asymmetries of information regarding production technology between the landlord and the tenant.

Suggested Citation

  • Avishay Braverman & Joseph E. Stiglitz, 1986. "Cost-Sharing Arrangements under Sharecropping: Moral Hazard, Incentive Flexibility, and Risk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(3), pages 642-652.
  • Handle: RePEc:oup:ajagec:v:68:y:1986:i:3:p:642-652.
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    File URL: http://hdl.handle.net/10.2307/1241548
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    Cited by:

    1. Duarte N. Leite & Sandra T. Silva & Oscar Afonso, 2014. "Institutions, Economics And The Development Quest," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 491-515, July.
    2. repec:ags:aergaa:262443 is not listed on IDEAS
    3. Schoney, R. A., 1990. "An Analysis of Wheat Supply Response Under Risk and Uncertainty," Working Papers 244030, Agriculture and Agri-Food Canada.
    4. Rambonilaza, Mbolatiana, 2004. "Normes sociales et productivité dans le processus d’appariement des contrats agricoles," L'Actualité Economique, Société Canadienne de Science Economique, vol. 80(4), pages 571-592, Décembre.
    5. Stiglitz, Joseph E., 2018. "Pareto efficient taxation and expenditures: Pre- and re-distribution," Journal of Public Economics, Elsevier, vol. 162(C), pages 101-119.
    6. Islam, Roumeen, 2003. "do more transparent government govern better?," Policy Research Working Paper Series 3077, The World Bank.
    7. Jean-Philippe Colin & Emmanuelle Bouquet, 2001. "Le métayage comme partenariat. L'arrangement a médias dans la Sierra Madré orientale," Économie rurale, Programme National Persée, vol. 261(1), pages 77-92.

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