Evolution of Agricultural Land Leasing Models: A Survey of the Literature." Review ofAgricultural Economics

Issues relating to agricultural tenancy have been viewed as important economic questions since the early writings of Smith and Mill. At the close of the twentieth century, interest in these issues remains strong. In developing countries with agrarian eco omies, this interest i stim-ulated by the perceived irnportance of land lease arrangements in ei her fostering or impeding economic developrnent. I the United States, where the proportion offarmland operated under lease arrangements has increased from 35 % in 1950 to 43 % in 1992 (USDA 1992), concem focuses on efficiency of resource use and issues such as effects of absentee landownership and tenant farming on theadoption of soii-conserving producfion practices. B eginning with Smith, agricultural land lease arrangements have been analyzed in the framework of several altemative paradigms. Each of these paradigms embodies assumpfions about characteristics and objectives of contracting parties and the insfitufional setting. In this article, we survey the literature through which most of these altemative paradigrns have evolved. We begin with classical models, which examine alternative land lease arrangements under assumptions of output certainty and symmetric nformafion between landlords and tenants. These models focus on input use efficiency under altemative l ase arrangements. Their general implication is that share contracts are inefficient compared with rent and wage contracts because a share tenant, who receives only a portion of output, will apply less-than-efficient input quantities in equating his share of the value of the marginal product with the marginal factor cost. We then discuss crificisms of this model and refinements, which lead to efficient resource use under share arrangements