Contract Duration and the Division of Labor in Agricultural Land Leases

Jonathan Keith Yoder (), Ishrat Hossain, Francis Eppin and Damona Doye ()
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Damona Doye: School of Economic Sciences, Washington State University

No 2005-6, Working Papers from School of Economic Sciences, Washington State University

Abstract: Short-term contracts provide weak incentives for durable input investment if post-contract asset transfer is difficult. Our model shows that when both agents provide inputs, optimal contract length balances weak incentives of one agent against the other. This perspective broadens the existing contract duration literature, which emphasizes the tradeoff between risk sharing and contract costs. We develop hypotheses and test them based on private grazing contracts from the Southern Great Plains. We find broad support for the implications of our model. For example, landowners provide durable land-specific inputs more often under annual versus multiyear contracts.

Keywords: land lease contracts; moral hazard; contract duration; division of labor. (search for similar items in EconPapers)
JEL-codes: J43 L23 Q15 (search for similar items in EconPapers)
Date: 2005-05
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http://129.3.20.41/eps/othr/papers/0506/0506011.pdf First version, 2005 (application/pdf)

Related works:
Working Paper: Contract Duration and the Division of Labor in Agricultural Land Leases (2005)
Working Paper: Contract Duration and the Division of Labor in Agricultural Land Leases (2005)
Journal Article: Contract duration and the division of labor in agricultural land leases (2008)
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