The effect of information structure on farmland contractual choice: toward a revised theory of share tenancy with new evidence from Guangdong, China

Yiming He and Alan R. Collins

International Review of Law and Economics, 2021, vol. 65, issue C

Abstract: We develop a theoretical model to identify optimal farmland contracts for lessors under different information structures. Under complete information, a fixed-rent contract is hypothesized to be the optimal institutional arrangement. Conversely, a share contract is found to be the best choice under incomplete information. Assuming that contracts between lessors and tenants from the same village operate under complete information and that contracts with tenants from outside the village operate under incomplete information, the empirical results confirm both hypotheses by showing that lessors with incomplete information have a lower probability of choosing a fixed-rent contract compared to lessors with complete information.

Keywords: Fixed-rent and share contracts; Information structure; Propensity score matching (search for similar items in EconPapers)
JEL-codes: C54 K12 Q15 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:65:y:2021:i:c:s0144818820301629

DOI: 10.1016/j.irle.2020.105949

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