Land Distribution, Incentives and the Choice of Production Techniques in Nicaragua

Oriana Bandiera

No 3141, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The distribution of property rights has a strong impact on output when, due to the non-contractibility of some inputs, market contracts do not yield efficient outcomes. In this Paper I analyse how the distribution of land rights affects the choice of both contractible techniques ? such as crop mix or irrigation ? and non-contractible effort when these are complements in production. I present evidence from rural Nicaragua suggesting that farmers are more likely to grow effort-intensive/highly profitable crops on the plots they own rather than on the plots they rent. I consider two theoretical arguments that illustrate why property rights might matter. The first relies on the fact that the agent who chooses effort is subject to a limited liability constraint, the second that the owner cannot commit to output-contingent contracts. In both models the choice of technique might be inefficient, regardless of the distribution of property rights. The efficiency loss is, however, lower when the farmer owns the land. Further empirical investigation shows that, in this context, the inability to commit seems to be the main source of inefficiency.

Keywords: Agricultural productivity; Asymmetric information; Crop choices (search for similar items in EconPapers)
JEL-codes: D82 O12 O17 (search for similar items in EconPapers)
Date: 2002-01
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://cepr.org/publications/DP3141 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Land Distribution, Incentives and the Choice of Production Techniques in Nicaragua (2002)
Working Paper: Land distribution, incentives and the choice of production techniques in Nicaragua (2002)
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:cpr:ceprdp:3141

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP3141

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().