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Sharecropping, interlinkage, and price variation

Author

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  • Debapriya Sen

    () (Dept. of Economics, SUNY at Stony Brook)

Abstract

This paper proposes a theory of sharecropping and interlinkage on the basis of seasonal variation of price and imperfectly competitive nature of rural product markets. First, a benchmark model is considered to show the optimality of sharecropping in the presence of price variation. This model is extended by allowing interlinked contracts to show that there are multiple equilibria and both forms of contracts�fixed rental and sharecropping�can be sustained in equilibrium. Finally, incorporating the possibility of competition in the product market, an equilibrium refinement is proposed and it is shown that the unique equilibrium that is robust to this refinement results in a contract that involves sharecropping as well as interlinkage. This theory also sheds light on several related issues like observed uniformity of share contracts, technological stagnation and the notion of power in a rural context.

Suggested Citation

  • Debapriya Sen, 2005. "Sharecropping, interlinkage, and price variation," Department of Economics Working Papers 05-10, Stony Brook University, Department of Economics.
  • Handle: RePEc:nys:sunysb:05-10
    as

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    File URL: http://www.stonybrook.edu/commcms/economics/research/papers/2005/times.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Sharecropping; interlinkage; price variation; rural product market; the -agent;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets

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