Incomplete Contracts and Investment : A Study of Land Tenancy in Pakistan

When contracts are incomplete, relationship-specific investments may be underprovided due to the threat of opportunistic expropriation or holdup. The authors find evidence of such underinvestment on tenanted land in rural Pakistan. Using data from households cultivating multiple plots under differen...

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Main Authors:	Jacoby, Hanan G., Mansuri, Ghazala
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ADVERSE SELECTION AGRICULTURAL LAND AGRICULTURE ASYMMETRIC INFORMATION CONTRACT THEORY CONTRACTUAL ARRANGEMENTS COST FUNCTIONS CREDIT DISCOUNT RATE DISECONOMIES OF SCALE EVICTION EXPROPRIATION HOUSEHOLDS HUMAN CAPITAL INCENTIVE EFFECTS INCOMPLETE CONTRACTS INEFFICIENCY INVESTMENT BEHAVIOR INVESTMENT INCENTIVES LAND TENURE LANDLORD LANDLORDS LANDOWNERS LEASE LEASING LIABILITY MAXIMUM LIKELIHOOD ESTIMATION MORAL HAZARD OPPORTUNITY COST OPTIMAL CONTRACT PRODUCTION EFFICIENCY PRODUCTION FUNCTION PROPERTY RIGHTS RENTS RETURN ON INVESTMENT RISK RISK AVERSION RISK-NEUTRAL STATEMENTS TENANCY TENANTS WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2006/02/6541576/incomplete-contracts-investment-study-land-tenancy-pakistan http://hdl.handle.net/10986/8825

id	okr-10986-8825
recordtype	oai_dc
spelling	okr-10986-88252021-04-23T14:02:40Z Incomplete Contracts and Investment : A Study of Land Tenancy in Pakistan Jacoby, Hanan G. Mansuri, Ghazala ADVERSE SELECTION AGRICULTURAL LAND AGRICULTURE ASYMMETRIC INFORMATION CONTRACT THEORY CONTRACTUAL ARRANGEMENTS COST FUNCTIONS CREDIT DISCOUNT RATE DISECONOMIES OF SCALE EVICTION EXPROPRIATION HOUSEHOLDS HUMAN CAPITAL INCENTIVE EFFECTS INCOMPLETE CONTRACTS INEFFICIENCY INVESTMENT BEHAVIOR INVESTMENT INCENTIVES LAND TENURE LANDLORD LANDLORDS LANDOWNERS LEASE LEASING LIABILITY MAXIMUM LIKELIHOOD ESTIMATION MORAL HAZARD OPPORTUNITY COST OPTIMAL CONTRACT PRODUCTION EFFICIENCY PRODUCTION FUNCTION PROPERTY RIGHTS RENTS RETURN ON INVESTMENT RISK RISK AVERSION RISK-NEUTRAL STATEMENTS TENANCY TENANTS WEALTH When contracts are incomplete, relationship-specific investments may be underprovided due to the threat of opportunistic expropriation or holdup. The authors find evidence of such underinvestment on tenanted land in rural Pakistan. Using data from households cultivating multiple plots under different tenure arrangements, they show that land-specific investment is lower on leased plots. This result is robust to the possible effects of asymmetric information in the leasing market. Greater tenure security also increases land-specific investment on leased plots. Moreover, variation in tenure security appears to be driven largely by heterogeneity across landlords, suggesting that reputation may be important in mitigating the holdup problem. 2012-06-22T19:14:20Z 2012-06-22T19:14:20Z 2006-02 http://documents.worldbank.org/curated/en/2006/02/6541576/incomplete-contracts-investment-study-land-tenancy-pakistan http://hdl.handle.net/10986/8825 English Policy Research Working Paper; No. 3826 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia Pakistan
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ADVERSE SELECTION AGRICULTURAL LAND AGRICULTURE ASYMMETRIC INFORMATION CONTRACT THEORY CONTRACTUAL ARRANGEMENTS COST FUNCTIONS CREDIT DISCOUNT RATE DISECONOMIES OF SCALE EVICTION EXPROPRIATION HOUSEHOLDS HUMAN CAPITAL INCENTIVE EFFECTS INCOMPLETE CONTRACTS INEFFICIENCY INVESTMENT BEHAVIOR INVESTMENT INCENTIVES LAND TENURE LANDLORD LANDLORDS LANDOWNERS LEASE LEASING LIABILITY MAXIMUM LIKELIHOOD ESTIMATION MORAL HAZARD OPPORTUNITY COST OPTIMAL CONTRACT PRODUCTION EFFICIENCY PRODUCTION FUNCTION PROPERTY RIGHTS RENTS RETURN ON INVESTMENT RISK RISK AVERSION RISK-NEUTRAL STATEMENTS TENANCY TENANTS WEALTH
spellingShingle	ADVERSE SELECTION AGRICULTURAL LAND AGRICULTURE ASYMMETRIC INFORMATION CONTRACT THEORY CONTRACTUAL ARRANGEMENTS COST FUNCTIONS CREDIT DISCOUNT RATE DISECONOMIES OF SCALE EVICTION EXPROPRIATION HOUSEHOLDS HUMAN CAPITAL INCENTIVE EFFECTS INCOMPLETE CONTRACTS INEFFICIENCY INVESTMENT BEHAVIOR INVESTMENT INCENTIVES LAND TENURE LANDLORD LANDLORDS LANDOWNERS LEASE LEASING LIABILITY MAXIMUM LIKELIHOOD ESTIMATION MORAL HAZARD OPPORTUNITY COST OPTIMAL CONTRACT PRODUCTION EFFICIENCY PRODUCTION FUNCTION PROPERTY RIGHTS RENTS RETURN ON INVESTMENT RISK RISK AVERSION RISK-NEUTRAL STATEMENTS TENANCY TENANTS WEALTH Jacoby, Hanan G. Mansuri, Ghazala Incomplete Contracts and Investment : A Study of Land Tenancy in Pakistan
geographic_facet	South Asia Pakistan
relation	Policy Research Working Paper; No. 3826
description	When contracts are incomplete, relationship-specific investments may be underprovided due to the threat of opportunistic expropriation or holdup. The authors find evidence of such underinvestment on tenanted land in rural Pakistan. Using data from households cultivating multiple plots under different tenure arrangements, they show that land-specific investment is lower on leased plots. This result is robust to the possible effects of asymmetric information in the leasing market. Greater tenure security also increases land-specific investment on leased plots. Moreover, variation in tenure security appears to be driven largely by heterogeneity across landlords, suggesting that reputation may be important in mitigating the holdup problem.
format	Publications & Research :: Policy Research Working Paper
author	Jacoby, Hanan G. Mansuri, Ghazala
author_facet	Jacoby, Hanan G. Mansuri, Ghazala
author_sort	Jacoby, Hanan G.
title	Incomplete Contracts and Investment : A Study of Land Tenancy in Pakistan
title_short	Incomplete Contracts and Investment : A Study of Land Tenancy in Pakistan
title_full	Incomplete Contracts and Investment : A Study of Land Tenancy in Pakistan
title_fullStr	Incomplete Contracts and Investment : A Study of Land Tenancy in Pakistan
title_full_unstemmed	Incomplete Contracts and Investment : A Study of Land Tenancy in Pakistan
title_sort	incomplete contracts and investment : a study of land tenancy in pakistan
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2006/02/6541576/incomplete-contracts-investment-study-land-tenancy-pakistan http://hdl.handle.net/10986/8825
_version_	1764405782721331200

Incomplete Contracts and Investment : A Study of Land Tenancy in Pakistan

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