An organizational economics approach to the existence of sharecropping
J. Pihttps://doi.org/10.17221/127/2012-AGRICECONCitation:Pi J. (2013): An organizational economics approach to the existence of sharecropping. Agric. Econ. – Czech, 59: 537-541.
The paper provides a new explanation for the existence of sharecropping in agriculture from the perspective of organizational economics. Similar to a multinational enterprise’s decision of whether to enter a joint venture or to choose a wholly owned subsidiary, we can see sharecropping as a joint venture and a fixed rent contract as a wholly owned subsidiary when we stand in the tenant’s position. Our analysis shows that when the landlord has a strong enough comparative advantage in exerting one type of effort, he/she tends to choose the share contract.Keywords:
share contract, fixed rent contract, bargaining power