A Model of Share-Cropping with Interlinked Markets in a Dual Agrarian Economy

Abstract

Two common features of poor agrarian economies widely discussed in the literature on peasant economies are the sharecropping tenurial system and the interlinkage between land, labour and credit markets. This paper constructs a general model of sharecropping along with interlinkage between the three markets. Contrary to existing models of pure tenants, the present model incorporate a realistic feature of an agrarian economy with landed tenants who cultivate not only their own piece of land but also leased-in land. Under some structural and institutional conditions, results confirm that efficiency is achievable, which benefits both the landlord and the tenant; the landlord could even gain more under other conditions.