Contract Duration and the Division of Labor in Agricultural Land Leases

Jonathan Yoder (), Ishrat Hossain and Francis Eppin
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Ishrat Hossain: U. Technology, Sydney, Australia
Francis Eppin: Oklahoma State University

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Abstract: Short-term contracts provide weak incentives for durable input investment if post-contract asset transfer is difficult. Our model shows that when both agents provide inputs, optimal contract length balances weak incentives of one agent against the other. This perspective broadens the existing contract duration literature, which emphasizes the tradeoff between risk sharing and contract costs. We develop hypotheses and test them based on private grazing contracts from the Southern Great Plains. We find broad support for the implications of our model. For example, landowners provide durable land-specific inputs more often under annual versus multiyear contracts.

Keywords: land lease contracts; moral hazard; contract duration; division of labor (search for similar items in EconPapers)
JEL-codes: J43 L23 Q15 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2005-06-28
Note: Type of Document - pdf; pages: 39
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Contract duration and the division of labor in agricultural land leases (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpot:0506011

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