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Risk as Impediment to Privatization? The Role of Collective Fields in Extended Agricultural Households

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  • Delpierre, Matthieu
  • Guirkinger, Catherine
  • Platteau, Jean-Philippe

Abstract

As in the case of cooperatives, collective fields in extended agricultural households act as an insurance device, but entail inefficiencies arising from the incentives to free ride on co-workers efforts. Privatization provides good incentives but decreases the level of risk-sharing. The classical analysis of this tradeoff rules out another major risk-sharing mechanism, namely income transfers. This paper is a first attempt to merge the two insurance mechanisms: collective production, which is plagued by free riding and income transfers, which are hampered by limited commitment. Privatization of land is shown to interact with incentives to abide by the insurance agreement, so that the tradeoff between risk-sharing and production may or may not be maintained with income transfers. We show that an increase in the value of the household members' exit option or a decrease in patience decreases the optimal rate of privatization, while larger households are more likely to privatize land.

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  • Delpierre, Matthieu & Guirkinger, Catherine & Platteau, Jean-Philippe, 2017. "Risk as Impediment to Privatization? The Role of Collective Fields in Extended Agricultural Households," CEPR Discussion Papers 12344, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12344
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    Cited by:

    1. Mertens, Kewan & Vranken, Liesbet, 2021. "Pro-poor land transfers in the presence of landslides: New insights on norms in land markets," Land Use Policy, Elsevier, vol. 101(C).
    2. Jean-Marie Baland & Roberta Ziparo, 2017. "Intra-household bargaining in poor countries," WIDER Working Paper Series wp-2017-108, World Institute for Development Economic Research (UNU-WIDER).
    3. Mertens, Kewan & Vranken, Liesbet, 2018. "Land Markets, Landslides and Social Norms: New Insights from a Discrete Choice Experiment," Working Papers 280764, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    4. Gwendoline Promsopha, 2018. "Risk†Coping, Land Tenure And Land Markets: An Overview Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(1), pages 176-193, February.
    5. Wytske O. Chamberlain & Ward Anseeuw, 2018. "Inclusive Businesses and Land Reform: Corporatization or Transformation?," Land, MDPI, Open Access Journal, vol. 7(1), pages 1-17, January.
    6. Rama Lionel Ngenzebuke, 2017. "The Returns of "I Do": Multifaceted Female Decision-making and Agricultural Yields in Tanzania," Working Papers ECARES ECARES 2017-05, ULB -- Universite Libre de Bruxelles.
    7. Gwendoline Promsopha, 2016. "Are free loans of land really free? An exploratory analysis of risk-coping motives in land arrangements in the Northeast of Thailand," Post-Print hal-01401878, HAL.
    8. Gwendoline Promsopha, 2017. "Are free land arrangement really free? An exploration into land arrangements made by rural-urban migrants in the Northeast of Thailand," Working Papers hal-01565843, HAL.
    9. Jean-Marie Baland & Roberta Ziparo, 2017. "Intra-household bargaining in poor countries," WIDER Working Paper Series 108, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Privatization; Risk-Sharing; Land Tenure; Mixed Farms;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • 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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