Sharecropping, Land Exploitation and Land-Improving Investments

17 Pages Posted: 12 May 2005

See all articles by Tridip Ray

Tridip Ray

Indian Statistical Institute, New Delhi - Delhi Centre

Abstract

This paper analyses the tenancy problem in a dynamic setup and addresses two long-standing issues: inefficiency and lack of investment. It considers the problems that the tenant, with a shorter-term interest in the farm than the landlord, might overexploit the land to maximize immediate returns even at the cost of future damages, and under-supply long-run productivity improving investments in land. I show that the efficient (first-best) levels of input use and investment can be achieved (both in the steady state and in transition) by a suitable share contract which, by dampening incentives to maximize current returns, addresses the land exploitation problem, and by an appropriate cost allocation rule which can address the investment problem.

Suggested Citation

Ray, Tridip, Sharecropping, Land Exploitation and Land-Improving Investments. Japanese Economic Review, Vol. 56, No. 2, pp. 127-143, June 2005. Available at SSRN: https://ssrn.com/abstract=722255

Tridip Ray (Contact Author)

Indian Statistical Institute, New Delhi - Delhi Centre ( email )

7 S .J. S.
Sansanwal Marg
New Delhi, 110016
India

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