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The Economics of Sharing: A Transactions Costs Analysis of Contractual Choice in Farming

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  • Peter Murrell

Abstract

This article analyzes the reasons for the adoption of contracts in which factors receive a share of output as payment. Previous theories are unsatisfactory in that their assumptions and predictions are inconsistent with basic features of activities in which such contracts are used. A new explanation is offered based on the transactional problems of multiperiod contractual relationships. It is shown that share rents can solve transactional problems when fixed rents have high transactions costs and internal organization cannot be used because of monitoring problems.

Suggested Citation

  • Peter Murrell, 1983. "The Economics of Sharing: A Transactions Costs Analysis of Contractual Choice in Farming," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 283-293, Spring.
  • Handle: RePEc:rje:bellje:v:14:y:1983:i:spring:p:283-293
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    Cited by:

    1. Christine L├ęger-Bosch, 2018. "Farmland Tenure and Transaction Costs," Working Papers hal-01775201, HAL.
    2. Burke, Mary A., 2015. "The distributional effects of contractual norms: the case of cropshare agreements," Working Papers 15-7, Federal Reserve Bank of Boston.
    3. Lee J. Alston & Bernardo Mueller, 2010. "Property Rights, Land Conflict and Tenancy in Brazil," NBER Working Papers 15771, National Bureau of Economic Research, Inc.
    4. Brhanu , Desta & Holden , Stein T., 2018. "Variation in Output Shares and Endogenous Matching in Land Rental Contracts," CLTS Working Papers 2/18, Norwegian University of Life Sciences, Centre for Land Tenure Studies.

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