StevenCheungchosesharetenancyasthesubjectonwhichtoconcentrate.Itwasahappychoice,forthreereasons.First,itwas(andstillis)animportantformofgovernanceinagriculture,aswellasinvariousservicetrades.Second,sharetenancycontractsdisplayproblemstypicalofabroadspectrumofcontractualarrangements:todaytheseproblemsareoftendiscussedunderthe“principal-agent”label.Third,previousconclusionsonsharetenancyseemedtoosimple,evensuspect:itwasthereforenecessaryforthemtobereconsidered.NotonlydidCheungprovedthathewasamasterofthenewtheoreticalframework,toasignificantextent,hecodifiedit.TheTheoryofShareTenancyisconvincingbecauseoftheauthor'sgraspofthelargeliteratureonsharecropping,hiscarefulanalysis,andhismeticuloususeofempiricalmaterialderivedfromanextensiverangeofsources.Itsmajorconclusionisnowpartofthebodyofeconomictheory:theresultsofliterallyallpreviousstudieswereunconvincing,andtheirclaimsthatsharetenancycontractsareinefficientwereillusory.Thisdealtthedeath-blowtothehabitofeconomistsofdeclaringasituationinefficient,evenwhentheywereunabletospecifyanyfeasiblemeanstoeradicatethesupposedinefficiency.Theyhadignoredtheverytangiblecostconstraints,whichrationallypreventedthestepsfrombeingtaken.
Finally,TheTheoryofShareTenancyisexcitingreading.
Theauthorpassionatelybelievesinhissubjectandinwhatheisdoing,andallthroughthebookthereadereagerlylooksforwardtowhatwillberevealednext.Notmanyeconomictreatiseshavethattingeofadventure.
Stockholm,May2000
ToMyFather
InGratefulMemory
PREFACE
FouryearsagoIaccumulatedmaterialonpropertylawsandagriculturaldatafromAsia.MyhopewastointegratetheinformationwitheconomictheoryformydoctorateattheUniversityofCalifornia,LosAngeles.Iwouldhavefailedinthisendeavorexceptthatmyadviserspersuadedmetoconcentrateononlytwosetsofpropertyrightconstraintsdefinedbylawinagricultureandontheassociatedleasingarrangements.
Eventhatlimitedtaskwasdifficult.TherentalsharerestrictionimposedbytheTaiwangovernmentledtooutputincreasesintenantfarms,anobservationwhichwasatfirstsightinconsistentwitheconomictheory.Prolongedinvestigationsweremadeofthereliabilityofthedataandofanexplanationotherthantherentalsharerestrictionfortheoutputincreases.Whenthisfailed,Idecidedtousestandardeconomicprinciplestoformulatehypothesesrelatingtosharetenancy（orsharecropping）.Havingpletedthefirstdraftofmythesis,however,Ifoundmyselfinterestedinlandtenurearrangementsingeneralasmuchasinspecificagrarianreforms.Furtherinvestigationsweremadeandrevisionsfollowed.Theouteisthisbook.
Forgenerationseconomistsandlandtenurewritershavesoughttoranktherelativeefficiencyofresourceuseunderdifferentleasingarrangements.Forexample,sharetenancyhaslongbeenconsideredinefficient,ashaveleasesofrelativelyshortduration.Indeed,tenancyingeneralhasbeenregardedaslessefficientthanownercultivation.Writersindevelopmenteconomicshavefrequentlyassertedthatstandardeconomictheorycannotbeappliedtoconditionsinunderdevelopedcountries.Exceptionshavebeenalleged,"irrational"behaviorhasbeendiscerned,andspecialtheoriessuchas"disguisedunemployment"andthe"dualeconomy"havebeenadvanced.Theseanalyses,however,haveignoredtherelevantpropertyrightconstraints.Mydisagreementwiththeirconclusionsisonlynatural.
Everytransactioninvolvesacontract.Thetransactionsconductedinthemarketplaceentailoutrightorpartialtransfersofpropertyrightsamongindividualcontractingparties.Thecontractualarrangementsthroughwhichthesetransfersarenegotiatedareseveralandvaried.Insteadofrankingtherelativeefficiencyofthesearrangements,Ishowthatsuchrankingwithoutreferencetothepropertyrightconstraintsisfutile.Furthermore,Iseektoexplain（1）whythepatternsofagriculturaloutputdifferundertwosetsofpropertyrightconstraints,and（2）whydifferentcontractsarechosenunderthesamepropertyrightconstraints.
AsastudentatUCLA,IrepeatedlyauditedthepricetheorylecturesofArmenA.AlchianandJackHirshleifer.Theirinfluenceonmythinkinghasbeenprofound.TheyandRobertRooneyguidedmeinmydissertation.OtherswhogavemevaluableencouragementincludeEvseyDomar,MasonGaffney,JudithMann,JohnPippengerandMichaelThomson.EldonDvorak,thenacolleagueatCaliforniaStateCollegeatLongBeach,cametomyaidalmostdaily.Forthefinalelaboraterevision,D.GaleJohnsonandTheodoreW.Schultzhaveallowedmetoconsumetheirhumancapitallavishly.HarryG.Johnsonreadandmentedontheentiremanuscript.Chapter4waswrittenlast,andreceivedtheadditionalbenefitofadvicefromRonaldH.Coase,HaroldDemsetz,JohnMcManus,andGeorgeJ.Stigler.Myresearchassistant,PatriciaKuttner,boremostoftheburdenofproofreadingandpilingtheindex.
SeveralorganizationsinTaiwankindlyprovidedmewithvaluabledata,includingtheSino-AmericanJointCommissiononRuralReconstruction,theTaiwanProvincialLandBureau,theDepartmentofAgricultureandForestry,andtheBankofTaiwan.
TheEconomicsDepartmentandtheLibraryofCaliforniaStateCollegeatLongBeachmadetheirresearchfacilitiesavailabletome,asdidtheorientallibrariesatBerkeley,Stanford,UCLA,andChicago.