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Abstract

This paper addresses two issues: the relationship between the choice of rental contract in agriculture and the set of conditions or environment under which such contracts are arrived at, and the implications of this relationship for efficiency, equity, and development policy. Both issues have been the subject of much discussion in the theoretical literature of late. In particular, close attention has been paid to the role of imperfections in, or outright failure of, one or more markets. This has led, in turn, to the notion of "market interconnectedness" in the narrow sense that the same two agents will deal with one another in several markets simultaneously, an obvious example being the landlord who also provides credit to tenants. Two main analytical approaches are discernible. The first posits free entry for an indefinitely large set of agents who have access to parametrically given alternative utility levels elsewhere in the economy. The resulting equilibria are normally characterized by utility equivalent contracts, which are the outcome of a Nash noncooperative game. The second assumes barriers to entry in the face of market failure so that, in equilibrium, the set of contracts is the outcome of a system of Nash cooperative games. Taken together they yield a rich taxonomy and a number of interesting results.

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