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Jon Reiersen:
Limited Liability and Contractual Structure in Agriculture.  A Note

Tønsberg: Høgskolen i Vestfold, 2001.Notat 10/2001 
Tønsberg: Vestfold University College, 2001. Paper 10/2001
17s.  

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About the paper: 

This paper explores the role of a limited liability clause – which allows a tenant to forego paying rent in the event of a crop failure – with regard to contractual structure in agrarian economies. If a tenant’s wealth is sufficient to cover fixed-rent commitments, even if output is low, he will receive a fixed-rent contract. For the landlord, this is preferable to other types of contract because when effort is non-contractible only a fixed-rent contract provides efficient incentives for labor input. If the tenant has little wealth, inefficient share-rent contracts emerge, with the resulting inefficiency varying inversely with the wealth of the tenant. As a result, landlords tend to prefer wealthier tenants. 

About the Author:


Jon Reiersen is Assistant Professor in the Department of Economic and Social Studies at Vestfold College. 

Correspondence: Department of Economic and Social Studies, P.O. Box 2243, N-3103 Tønsberg, Norway, or e-mail to jon.reiersen@hive.no. 

 

Former publications: 
Jon Reiersen: Social Status and Work Incentives in Sharecropping.
The Case of Rural Bangladesh. A Note 
Høgskolen i Vestfold. Notat 9/2001 
Vestfold University College, 2001. Paper 9/2001

Jon Reiersen:  Unions, Wage-Bargaining Institutions and Economic Performance. Høgskolen i Vestfold. Notat 1/98
Vestfold University College, 1998. Paper 9/2001

 

Copyright: The Author/Vestfold College 

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Sist oppdatert: 04.09.2001
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