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


  • Peter Murrell


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. 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.
    2. Christine L├ęger-Bosch, 2018. "Farmland Tenure and Transaction Costs," Working Papers hal-01775201, HAL.
    3. Yashodha, Y., 2018. "Bargaining and Contract Choice: Evidence from Informal Groundwater Contracts," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276035, International Association of Agricultural Economists.
    4. Burke, Mary A., 2015. "The distributional effects of contractual norms: the case of cropshare agreements," Working Papers 15-7, Federal Reserve Bank of Boston.
    5. Desilva, Sanjaya, 2000. "Skills, Partnership and Tenancy in Sri Lanka Rice Farms," Center Discussion Papers 28401, Yale University, Economic Growth Center.
    6. Lee J. Alston & Bernardo Mueller, 2010. "Property Rights, Land Conflict and Tenancy in Brazil," NBER Working Papers 15771, National Bureau of Economic Research, Inc.

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