The Rational Choice of Share Leasing and Implications for Efficiency

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Abstract
A formal statement of the theory of contractual choice is developed to derive conditions under which share leasing is rationally chosen. The allocative efficiency of share and nonshare leasing arrangements is compared under these conditions. Contrary to previous analyses, share leasing is shown to result in a higher expected level of farm output than otherwise. Therefore, land reform measures which restrict share leasing cannot be justified on grounds of improving productivity nor, as it turns out, on grounds of improving the sharecropper's welfare.

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