A theory of sharecropping: The role of price behavior and imperfect competition

Debapriya Sen

Journal of Economic Behavior & Organization, 2011, vol. 80, issue 1, 181-199

Abstract: This paper proposes a theory of sharecropping on the basis of price behavior in agriculture and imperfectly competitive nature of rural product markets. First we show the superiority of sharecropping over fixed rental contracts in a benchmark landlord–tenant model with seasonal variation of price, where the tenant receives a low price for his output while the landlord can sell his output at a higher price. Then we consider more general interlinked contracts to show that there are multiple optimal contracts. Finally we incorporate imperfect competition in the product market by assuming that a third agent (called the ɛ-agent) may emerge to compete with the landlord as a buyer of the tenant's output. It is shown that (i) the presence of this competing agent generates a Pareto-improving subset of share contracts out of the multiple contracts and (ii) the unique contract that is robust to the emergence of the ɛ-agent results in sharecropping.

Keywords: Sharecropping; Price variation; Imperfect competition; Interlinkage; The ɛ-agent; Pareto-improving contracts (search for similar items in EconPapers)
JEL-codes: D02 D23 J43 O12 O17 Q15 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: A theory of sharecropping: the role of price behavior and imperfect competition (2009)
Working Paper: A theory of sharecropping: the role of price behavior and imperfect competition (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:80:y:2011:i:1:p:181-199

DOI: 10.1016/j.jebo.2011.03.006

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