Everytransactioninvolvesacontract.Thetransactionsconductedinthemarketplaceentailoutrightorpartialtransfersofpropertyrightsamongindividualcontractingparties.Thesetransfersmaybenegotiatedthroughmanydifferentcontractualarrangements.
Forgenerationseconomistsandlandtenurewritershavesoughttoranktherelativeefficiencyofresourceuseunderdifferentleasingarrangements.Buttheirinquirieswereundertakenwithoutexplicitreferencetothepropertyrightconstraintinvolved.Andinmanyinstances,thecharacteristicsofvariousleasecontractshadnotbeencarefullyexamined.Differentcontractualarrangementsdonotimplydifferentefficienciesofresourceallocationaslongaspropertyrightsareexclusiveandtransferable.Thecharacteristicsofleasecontractspresentedabovealsoconfirmthisstatement.
InthischapterIhaveasked:Whyaredifferentcontractualarrangementschosenunderthesamesystemofprivatepropertyrights?ToanswerthisquestionIhaveintroducedtransactioncostsandrisks.Theattempttoformulateachoice-theoreticapproachtoexplaintheobservedcontractualbehaviorinagri-culturehasperhapsraisedmorequestionsthanithasanswered.AndIhavebeenunabletopiecetogetherfragmentsofanalysisintoaformaltheory:theproblemsinthetheoryofchoiceinvolvingtransactioncostsandrisksarestillformidable.
Althoughthepresenceoftransactioncostsorrisksmayresultindifferentintensitiesofresourceuse,aswasnotedearlierinthischapter,availabledatadonotrevealnotabledifferencesinfarmingintensitiesforvariousleasingarrangementsunderprivatepropertyrights.[1]Thereasoningisasfollows.Themainformsoftenurearrangementsconsideredthusfarincludeownercultivation,wagecontracts,fixedrents,andsharecontracts.Forthesearrangements,economictheoryimpliesatendencytowardthesamesetofmarginalequalitiesofresourceuseeveniftransactioncostsexist.Toobtainanotabletendencytowardmarginalinequalities,transactioncostswouldhavetobesohighastoyield,forexample,thechoiceofacontractwithalump-sumchargeandwithoutquantifyingandpricingresourceunits.Lump-sumcontracts,however,havenotbeenimportantinAsianagricultureandcan,therefore,beignored.Instead,theeffectsoftransactioncostsandrisksarerevealedmainlyintheobservedchoiceofcontractualarrangementsand,lessnotably,theriskpremiumsdistributedamongthecontractingparties.
AmongsomerelatedproblemsthatIhaveexplicitlyavoided,thefollowingaresignificant.First,withrespecttoriskaversion,amoregeneralanalysiswouldincludeallriskychoices,notcontractualchoicealone.Theanalysiswouldbelessdifficultiftransactioncostswerenotinvolved.Second,withrespecttotransactioncosts,amoregeneralanalysiswouldderivesomespecificandwell-behavedcostfunctionoftransactions.Thisstepisessentialtothedevelopmentofamodelofgeneralequilibriumincludingtransactioncosts.
StillotherproblemsIhaveavoidedimplicitly.Inparticular,someleveloflawenforcementbylegalauthoritiesistakenforgranted.Onemaywellask:Whatwillhappentothechoiceofcontractsifthegovernmentchangesitsenforcementefforts?TowhatextentwilltheseeffortsbeconsistentwiththeParetocondition?Whatsetoflegalinstitutionsisconsistentwiththeoperationofthemarketplace?Withthesequestionsunanswered,theconditionsdefiningefficiencywithtransactioncostsarenotallclear.Letmeexplain.
Inproduction,costminimizationrequiresnotonlythefulfillmentofthefamiliarsetofmarginalequalities,butalsothechoiceofthelowest-costproductionmethodavailable.Intransactions,onerelevantconsiderationisthecostofalternativecontractualarrangements,whichIhavediscussedatsomelength.Onemightthinkthat,asacostconstraint,efficiencywillbeattainedwhen,otherthingsequal,thesetofarrangementswiththelowesttransactioncostischosen.Buttransactioncostsalsodependonalternativelegalarrangements.Forexample,thevaryingeffectivenessoflawenforcement,orthevaryingcorruptibilityofcourts,willaffectthecostsoftransactionsinthemarketplace.Giventheexistinglegalinstitutions,Ihaveattemptedtoexplaintheobservedcontractualarrangements.ButinsofarasIhaveignoredthechoiceanddevelopmentofthelegalinstitutions,theParetoconditionwithtransactioncostsisambiguous.
Ihavealsonotexploredthecontractualbehaviorassociatedwithdifferentpropertyrightconstraints.Variousrestrictionsonthetransferofpropertyrights,orvariousmethodsofattenuatingtherightofaresourceownertoobtaininefromhisresource,willaffecttheleasingarrangementsaswellasresourceallocation.IntheremainingchaptersIanalyzeoneimportantconstraint,namely,thelegallimitationonthelandowner'srentalinetoamaximumpercentageoftheannualyield.
[1].Oneexceptionisthatwefindthathousingassetsintenantfarmsweregenerallyoflowervaluethaninownerfarms（NationalGovernment,StatisticalAnalysis,pp.100-1）.Itmaybebecausehousingisalsoaconsumptionitemandtenantsweretypicallypoorer.
5.TransferEffectsofRentalShareRestriction:HypothesisandEvidenceofOffsettingContractualRearrangements