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THE BENEFITS OF SHARE CONTRACTS: SOME EUROPEAN RESULTS
Author(s) -
Petersson Johan,
Andersson Hans
Publication year - 1996
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.1996.tb00682.x
Subject(s) - renting , landlord , yield (engineering) , principal (computer security) , metric (unit) , economics , value (mathematics) , microeconomics , business , actuarial science , operations management , mathematics , statistics , computer science , materials science , political science , law , metallurgy , operating system
Less restricted trade may enhance demand for efficient risk management practices. Risk sharing arrangements have traditionally served the purpose of managing risk in agriculture. In this paper the set of share contract allocations defining the contract curve between tenant and landlord are derived analytically. An empirical example is provided for specialised crop farms in the presence of price, yield and input cost risk. The analysis is extended to a principal‐agent model where the money metric value of an optimal share contract is examined for some European farms. The optimal share ratio is estimated to be 68–72 per cent. The money metric value of the contract amounts to 30–80 per cent of the fixed rental rate.