Informational Rents and Property Rights in Land

Dilip Mookherjee

No 315942, Institute for Economic Development from Boston University

Abstract: Is the institution of land tenancy inefficient? If so, why does it survive? This paper uses a complete contracting framework to develop a theory of land ownership in the context of a labour surplus, subsistence economy. Ownership affects efficiency in the presence of incentive-based informational rents, and endogenous credit rationing both arising from wealth constraints. A ceteris paribus transfer of ownership to a tenant or hired labour results in higher bargaining power and rent capture by the cultivator This explains why small owner cultivated farms relying on fairly labour exhibit higher productivity and welfare (in a utilitarian sense). Nevertheless. tenancy results in a Pareto efficient outcome: the market will never effect such transfers. as tenants will not be able to borrow enough to purchase land. The model predicts that productivity differences between tenant and family farms will be large when population pressure on t he land is high, alternative employment opportunities of farmers are low, and their wealth levels are neither too low nor too high.

Keywords: Land; Economics/Use (search for similar items in EconPapers)
Pages: 43
Date: 1995
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/315942/files/IED55.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:bouied:315942

DOI: 10.22004/ag.econ.315942

Access Statistics for this paper

More papers in Institute for Economic Development from Boston University Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().