Partnership for Better or for Worse: Keeping Share Tenants on the Farm

Mark DeWeaver () and James Roumasset
Additional contact information
Mark DeWeaver: Kogod School ofÊBusiness, American University

No 202402, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: The risk-bearing theory of share tenancy has been found to be inconsistent with actual tenant shares, meaning there must be additional disadvantages of lease contracts in order to explain the historical prevalence of share tenancy. One such disadvantage is that fixed-rent contracts incentivize land abuse. We complement this explanation here by providing a dynamic context in which the land- abuse decision is linked to the tenantÕs decision to renew the contract. By offering appropriate share contracts, landlords can incentivize contract renewal, thereby both lowering the incentive for land abuse and preserving the tenantÕs land-specific human capital. In our model, tenants decide each period whether to terminate their contracts and abuse landlord-owned assets based on prior and updated beliefs about the likelihood of bad seasons. Share contracts are shown to be more likely than lease contracts to survive one or more bad harvests.

Keywords: share tenancy; opportunism; land abuse; contract choice; institutional economics; agricultural firms (search for similar items in EconPapers)
JEL-codes: J41 J43 O13 Q12 Q15 (search for similar items in EconPapers)
Date: 2024-07
New Economics Papers: this item is included in nep-agr
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.economics.hawaii.edu/research/workingpapers/WP_24-02.pdf First version, 2024 (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:hai:wpaper:202402

Ordering information: This working paper can be ordered from
http://www.economics ... esearch/working.html

Access Statistics for this paper

More papers in Working Papers from University of Hawaii at Manoa, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Web Technician ().