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Informational Rents and Property Rights in Land

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Property Relations, Incentives and Welfare

Part of the book series: International Economic Association Series ((IEA))

Abstract

The institution of sharecropping tenancy and its inefficiency has long fascinated development economists, especially following the famous footnotes on the subject in Marshall (1920).1 The tendency for a landlord to appropriate a fraction of the crop tilled by a tenant, and to interlink the tenancy contract with monopoly provision of credit, appears to many people to be ‘semi-feudal’ in character, inducing low levels of agricultural productivity. This orthodoxy has been challenged in the last two or three decades on a number of conceptual grounds, following the critique of the Marshallian argument by Cheung (1969). Sharecropping is viewed as providing a reasonable compromise between the need for a wealthy landlord to share risks with a poor tenant, and to provide incentives to the latter to apply effort (Stiglitz, 1974; Newbery, 1977; Bell, 1989; Singh, 1989). Interlinking of tenancy and credit contracts is viewed as an efficient response to the problem of moral hazard on the part of the tenant, to avoid externalities between landlords and creditors (Braverman and Stiglitz, 1982; Bell, 1989).

I have benefited from the comments of Pranab Bardhan and discussion with Bharat Ramaswami. In addition, I would like to thank the participants at seminars in the Delhi School of Economics, Harvard, ITAM Mexico, the Universidade Nova de Lisboa and the IEA Conference for their feedback.

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Authors and Affiliations

  1. Indian Statistical Institute, New Delhi, India

    Dilip Mookherjee

  2. Boston University, USA

    Dilip Mookherjee

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  1. Dilip Mookherjee
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Editors and Affiliations

  1. University of California, Davis, USA

    John E. Roemer (Professor of Economics) (Professor of Economics)

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© 1997 International Economic Association

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Mookherjee, D. (1997). Informational Rents and Property Rights in Land. In: Roemer, J.E. (eds) Property Relations, Incentives and Welfare. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-25287-9_1

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