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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.