Showing papers on "Leasehold estate published in 1973"

Towards a More General Model of Land Tenancy and Reform

Abstract: Introduction, 567. — I. Market structure of land leasing, 569. — II. Oligopoly land market, 573.

Risk, Entrepreneurship, and Tenancy

Abstract: Recent papers by Cheung (1968, 1969) and Rao (1971) have provided insights on how tenure contracts can be shaped by economic forces and are thus not exogenous, as has been assumed in most studies. On the surface, however, their theories appear to be contradictory. This paper will attempt to show that the two theories are compatible. Cheung argues that the tenancy contract selected can be explained in terms of a trade-off between risk and transactions cost. Under a fixed rental system, the entire risk burden falls on the tenant, while under a hired-labor wage contract it falls on the landlord. Sharecropping permits risk sharing and is a compromise between the extremes. Sharecropping, however, has the highest transactions costs and would not be preferred unless risks are high. Thus, Cheung would argue that sharecropping would appear most frequently in areas of greatest uncertainty; otherwise, fixed rentals would be preferred. Rao hypothesizes that sharecropping contracts are common in areas of relative economic certainty with very little scope for decision making, for example, factor substitution, and where entrepreneurial profit is low. Fixed cash rents would thus be common in situations of high uncertainty where the scope for decision making is significant or where the crops are highly profitable. The two views are not contradictory if one differentiates between risks associated with decision making and exogenous or natural risks beyond the control of the farmer. The point can be illustrated by examining the tenancy situation in the Malayan paddy economy. Table 1 shows the types of tenancy contracts that existed in the five states comprising the main paddy areas in Malaya in 1957. Sharecropping is prevalent in only one state, Kelantan, which is on the east coast. In comparison with the other states which are on the west coast, Kelantan has very low yields and risks are much higher due to poor weather conditions (seasonal flooding and monsoons), the absence of government irrigation facilities, and extensive pest damage; thus, production is very erratic and frequently much of the harvest is lost. Such risks and uncertainties, however, are due to environmental conditions beyond the control of the farmer. These conditions coupled with relatively poor soil result in yields 50 percent lower than in the western states and discourage entrepreneurial endeavors. On the west coast, government irrigation facilities, better