Informational Rents and Property Rights in Land

Dilip Mookherjee

Chapter 1 in Property Relations, Incentives and Welfare, 1997, pp 3-42 from Palgrave Macmillan

Abstract: Abstract The institution of sharecropping tenancy and its inefficiency has long fascinated development economists, especially following the famous footnotes on the subject in Marshall (1920).1 The tendency for a landlord to appropriate a fraction of the crop tilled by a tenant, and to interlink the tenancy contract with monopoly provision of credit, appears to many people to be ‘semi-feudal’ in character, inducing low levels of agricultural productivity. This orthodoxy has been challenged in the last two or three decades on a number of conceptual grounds, following the critique of the Marshallian argument by Cheung (1969). Sharecropping is viewed as providing a reasonable compromise between the need for a wealthy landlord to share risks with a poor tenant, and to provide incentives to the latter to apply effort (Stiglitz, 1974; Newbery, 1977; Bell, 1989; Singh, 1989). Interlinking of tenancy and credit contracts is viewed as an efficient response to the problem of moral hazard on the part of the tenant, to avoid externalities between landlords and creditors (Braverman and Stiglitz, 1982; Bell, 1989).

Keywords: Bargaining Power; Effort Level; Moral Hazard; Bargaining Solution; Nash Bargaining Solution (search for similar items in EconPapers)
Date: 1997
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Working Paper: Informational Rents and Property Rights in Land (1995)
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DOI: 10.1007/978-1-349-25287-9_1

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