A theory of sharecropping: the role of price behavior and imperfect competition

Debapriya Sen

MPRA Paper from University Library of Munich, Germany

Abstract: This paper proposes a theory of sharecropping on the basis of price behavior in agriculture and imperfectly competitive nature of rural product markets. We consider a contractual setting between one landlord and one tenant with seasonal variation of price, where the tenant receives a low price for his output while the landlord can sell his output at a higher price by incurring a cost of storage. We consider two different classes of contracts: (i) tenancy contracts and (ii) crop-buying contracts. It is shown that sharecropping is the optimal form within tenancy contracts and it also dominates crop-buying contracts provided the price variation is not too large. Then we consider interlinked contracts that have both tenancy and crop-buying elements and show that there are multiple optimal interlinked contracts. Finally, proposing an equilibrium refinement that incorporates imperfect competition in the rural product market, it is shown that the unique contract that is robust to this refinement results in sharecropping.

Keywords: Sharecropping; price variation; imperfect competition; tenancy contracts; crop-buying contracts; interlinkage; the epsilon-agent (search for similar items in EconPapers)
JEL-codes: D02 D23 J43 O12 O17 Q15 (search for similar items in EconPapers)
Date: 2009-04-24
New Economics Papers: this item is included in nep-com and nep-mic
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Related works:
Journal Article: A theory of sharecropping: The role of price behavior and imperfect competition (2011)
Working Paper: A theory of sharecropping: the role of price behavior and imperfect competition (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:14898

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