Bargaining and Efficiency in Sharecropping

Jon Reiersen

Journal of Agricultural Economics, 2001, vol. 52, issue 2, 1-15

Abstract: In this paper the Nash bargaining solution is used to derive solutions for the rental share and labour input in sharecropping. The bargaining is modeled as a two‐stage process. First there is a bargain about the rental share, and then a bargain about labour input. The power of the landlord to ensure an outcome favourable to himself may differ in the two stages. By imposing particular assumptions about this bargaining power, some popular models of sharecropping, that have been treated as completely separate in the literature, can be derived as special cases in our model. However, we also generate a new class of models. It is also demonstrated that it is not the tenant's influence in the labour input decision per se which causes inefficiency in sharecropping, but differences in the tenant's influence over different issues in the contract. This is in contrast to the popular view which states that if the tenant controls the level of labour input, sharecropping will result in an inefficient resource allocation.

Date: 2001
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