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Incentives, Risk, and Agency Costs in the Choice of Contractual Arrangements in Agriculture
Author(s) -
Agrawal Pradeep
Publication year - 2002
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00167
Subject(s) - sharecropping , leasehold estate , incentive , economics , agency (philosophy) , principal–agent problem , agency cost , microeconomics , principal (computer security) , agriculture , finance , law , ecology , corporate governance , philosophy , epistemology , political science , computer science , biology , shareholder , operating system
The author develops a theory of the choice of contractual arrangements in agriculture by analyzing the incentives, risk‐premia, and agency (supervision and shirking) costs under different contracts using the principal–agent framework. The theory is able to explain many tenancy‐related issues, such as why sharecropping can be the optimal contract even in the presence of considerable shirking by the tiller, the predominance of sharecropping and of the 50*T*:*T*50 output share, the coexistence of sharecropping with other contracts, and the tenancy ladder.