Share Contracts and Unobserved Ability

Eugene Canjels and Ute Volz
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Eugene Canjels: CEPA, New School University
Ute Volz: Johann Wolfgang Goethe-Universität

No 2001-03, SCEPA working paper series. from Schwartz Center for Economic Policy Analysis (SCEPA), The New School

Abstract: We present a model with a monopolistic landlord and tenants with unobservable ability. In this setting, the landlord should use a wage contract to extract the full surplus due to ability since a share or fixed rent contract leaves some of the surplus in the hands of the tenants. We combine this issue with a standard moral hazard problem on the tenants' side, which argues for a fixed rent contract. A share contract is an optimal compromise between these two forces.

Keywords: sharecropping; tenancy contracts; agricultural contracts; pooling equilibrium (search for similar items in EconPapers)
JEL-codes: C72 D82 O12 Q15 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2001-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:epa:cepawp:2001-03

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