@article{Nakajima:242130,
      recid = {242130},
      author = {Nakajima, Shinsaku},
      title = {Tenancy Contract Choice and Land Improvement Investment  for Upland Farming},
      journal = {Japanese Journal of Rural Economics},
      address = {2010},
      number = {360-2016-18591},
      pages = {19},
      year = {2010},
      abstract = {Relationship-specific investment in land improvement (e.g.  deep plowing and soil dressing) is necessary for upland  farming. If farmers leasing farmland are in an environment  where they are able to freely decide whether or not to  invest in land improvement, no problem arises. However, if  their intention to invest in land improvement is inhibited  by some factors, the problem of inefficient farming due to  underinvestment may arise. The problem of underinvestment  is most likely to occur under off-the-record farming  contracts (yami kosaku), which are a type of “incomplete  contract” in the sense that the contract period is not  predetermined. Because of incomplete contracts, farmers are  unwilling to invest since they cannot predict if they will  recoup their investment value while being open to eviction  threats (i.e. holdup problem). Based on these points, this  paper aims to analyze the empirical determinants on  contract type (i.e. establishing right of use basis, or  off-the-record contract basis) and the farmers'investment  choice in land improvement, using original data from  Atsumi-cho, Aichi Prefecture. The main findings are as  follows. First, use-right contracts encourage farmers to  invest in the leased land. It was indicated that the type  of contract influences the incentive for land investment.  Second, it was also found that the degree of trust (e.g.  kinship and proximity) between the landowner and the farmer  positively influences land investment. The third finding  was that the degree of opportunity cost regarding the  landowner's flexibility to engage in farming also  influences contract choice. Landowners not likely to engage  in agriculture were highly inclined to opt for use-right  contracts. These findings call for the encouragement of  use-right contracts by local governments, and a  compensation scheme for “beneficial expenses” in order to  provide farmers with incentives for land improvement.},
      url = {http://ageconsearch.umn.edu/record/242130},
      doi = {https://doi.org/10.22004/ag.econ.242130},
}