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The Nature of the Farm : Contracts, Risk, and Organization in Agriculture - Douglas W. Allen

The Nature of the Farm

Contracts, Risk, and Organization in Agriculture

Paperback Published: 20th August 2004
ISBN: 9780262511858
Number Of Pages: 266
For Ages: 18+ years old

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"The Nature of the Farm" is a theoretical and empirical study of contracts and organization in agriculture based on the transaction cost framework. Transaction costs are important in agriculture because nature (for example, seasonality, weather, pests) plays such a critical role in determining output and limiting the ability of farmers to specialize. The book develops specific models and tests the implications of those models against data sets from across North American agriculture, as well as against historical case studies such as eighteenth-century European land contracts and the late nineteenth-century Bonanza farms in the United States. The book is organized in three parts. Part I examines the classic question of what determines the optimal choice between fixed rent and cropshare arrangements, concluding that it is determined by a trade-off between incentives to overuse rented land and incentives to underreport shared output. Part II tests several predictions derived from a standard risk-sharing model of contracts and finds little evidence that risk sharing is important in contract choice. Part III extends the transaction costs analysis to broader organizational issues. It introduces seasonality and timeliness costs as forces influencing the gains from specialization and the costs of contracting, and finds that farm ownership and farm organization are routinely shaped by these forces.

Industry Reviews

"This book is a perfect example of good economics, in which theory and empirical analysis mutually benefit each other and both are grounded in a deep understanding of real practices and institutions. The work is highly original and the scholarship sound." - Benito Arrunada, Professor of Business Organisation, Pompeu Fabra University, Barcelona

Prefacep. vii
Introductionp. 1
Farming in North Americap. 17
Contracts and the Transaction Cost Frameworkp. 31
The Simplicity of Agricultural Contractsp. 33
Choosing between Cropshare and Cash Rent Contractsp. 49
Sharing Inputs and Outputsp. 69
Risk Sharing as an Alternative Frameworkp. 93
Risk Sharing and the Choice of Contractp. 95
Ratchet Effects in Agricultural Contractsp. 121
Extending the Framework: Farm Organizationp. 137
Ownership versus Contracting for the Control of Assetsp. 139
Farm Organization and Vertical Controlp. 167
Conclusionp. 199
Datap. 205
Mathematicalp. 219
Notesp. 223
Referencesp. 243
Indexp. 255
Table of Contents provided by Ingram. All Rights Reserved.

ISBN: 9780262511858
ISBN-10: 0262511851
Series: The MIT Press
Audience: Professional
For Ages: 18+ years old
Format: Paperback
Language: English
Number Of Pages: 266
Published: 20th August 2004
Publisher: MIT Press Ltd
Country of Publication: US
Dimensions (cm): 22.23 x 16.51  x 1.91
Weight (kg): 0.4