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AN ASSET-RISK MODEL OF REVERSE TENANCY

Marc Bellemare () and Christopher Barrett ()

No 22132, 2003 Annual meeting, July 27-30, Montreal, Canada from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Reverse tenancy, wherein poorer landlords rent out land to richer tenants on shares, is a common phenomenon. Yet, it does not fit existing theoretical models of sharecropping and has never before been modeled in the development microeconomics literature. We explain reverse tenancy contracts using an asset risk model that incorporates moral hazard. When choosing the terms of an agrarian contract, the landlord considers the impact of her choice on the probability that she will retain future rights to the rented land. Thus, this model captures the effect of tenure insecurity and property rights on agrarian contracts. The main testable implication of the theoretical model is that, as property rights become more secure, reverse tenancy tends to disappear.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea03:22132

DOI: 10.22004/ag.econ.22132

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