Transaction costs and the design of cropshare contracts

Douglas W. Allen, Dean Lueck

Research output: Contribution to journalArticlepeer-review

76 Scopus citations

Abstract

Modern cropshare contracts are explained using a model in which agents are risk neutral and contract rules are chosen to maximize expected joint wealth. It is shown that the farmer either bears the entire cost of inputs or shares the costs with the landowner in the same proportion as the output. The incentives of altering the cropshare percentage are examined and are used to derive implications about the portion of the crop that will be owned by the farmer. The model is tested and supported using data from a 1986 survey of farmers and landowners in Nebraska and South Dakota.

Original languageEnglish (US)
Pages (from-to)78-100
Number of pages23
JournalRAND Journal of Economics
Volume24
Issue number1
DOIs
StatePublished - 1993
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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