1.Inthereallocationofresources,thechangesinnonlandinputintensityrespondedinavarietyofways.Moreresourcesweredirectedtoagricultureasawhole.Whiletherewasasmallincreaseinowner-operatedfarmsunderthesharerestriction,wefindnonlandinputintensityincreasingintenantfarmsanddeclininginownerfarms.Specifically,wefind(a)theland-farmerratiodeclinedfortenantfarmsandincreasedforownerfarms,totheextentthattheformerwassignificantlylowerthanthelatter;(b)tenantswerereportedtohaveworkedlongerhoursandmoredaysinayear,(c)fertilizersusedwereofhigherquality;and(d)theincreaseintenantinewasreportedtohavebeenlargelyinvestedinland.
2.Theimplicationthatthemarginalproductoflandintenantfarmswashigherthanelsewhereisconfirmedbythefollowingfindings:(a)thereallocationofresourcesasdescribedinparagraph1above;(b)theriseincropareaandcrophectareyieldofintramarginalcropsintenantfarms;(c)thesignificantriseincropareaformarginalcropsaddedintenantfarmsatarateproportionatelygreaterthanthedecreaseincrophectareyield,thusleadingtoariseoftotalyieldperacreofcultivated(physical)landintenantfarms;and(d)theproductionresponsesofhorticulture.
3.Theimplicationthatthemarginalproductsofresourcesotherthanlandintenantfarmswerelowerthanelsewhereisconfirmedbythefollowingfindings:(a)thereallocationofresourcesasdescribedinparagraph1above;(b)thegeneraldecreaseincrophectareyieldsformarginalcropsaddedintenantfarms;and(c)theoutputresponsesofhorticulture.
4.Forparagraphs2and3above,thedetectedpatternsofmarginalcropchoicealsopointtothesameimplications.Themorefrequentmarginalcropschosen,asisdemonstratedamongvegetablecrops,werethosethatrequire(a)ashortergrowingtime,or(b)ahighercostofplanting.Thesepatternsofchoiceareimpliedbythetheoryofsharetenancywithrentalsharerestriction.
9.Conclusions
Thisstudyhasanalyzedtheinterplayofpropertylaws,economictheory,andobservationsoflanduseinAsianagriculture.Thisinterplay,thoughplex,isperhapstheonlyapproachthroughwhichtheeconomicsoflandtenurecanbeproperlyunderstood.
Ofthevariousaspectsoftheeconomicsofpropertyrights,Ihaveconcentratedonthetheoryandimplicationsofleasingarrangementsinagriculture.Thesharecontracthasbeenthemainconcern,foramongtenurearrangements,sharecroppinghasbeenthemaintargetofcondemnation.Twosetsofpropertyrightconstraintswereanalyzed.
ApreliminaryinvestigationofpropertylawsgoverningfarmlandownershipinChinaandTaiwanbefore1949concludedthatasystemofprivatepropertyrightshadexistedinChineseagriculture.Theconstraintofprivatepropertyrights,therefore,wasbinedwithstandardeconomicanalysistoderiveatheoryofresourceallocationundersharetenancy.Contrarytopreviousanalysesofthesubject,thetheoreticalresultsshowedthatdifferentcontractualarrangementsdonotimplydifferentefficienciesofresourceuse.Implicationsofalternativetheoriesweretestedagainstobservationschosenfromperiodsandlocationswheretheexistingsystemofpropertyrightsagreedwiththeconstraintofprivatepropertyrights.Notonlydidtheobservationsconfirmmytheoryofsharetenancy,buttheyrefutedthetradi-
tionaltax-equivalentapproach.Indeed,thetaxapproachfailedthetrialoflogicaswellasthetrialoffact.
Theterm"economicefficiency"usedinthisstudyhasasimplemeaning.Itisaconditionofmarketequilibriumlogicallydeducedfromthetheoryofchoice,subjecttotheconstraintofprivatepropertyrightsunderafreelypetitivemarket.Itisapositiveterm,devoidofwelfareimplications.Viewingitassuch,onewonderswhytheinefficiencyargumentofsharecontractshasprevailedforsolong.Perhapstheillusionproducedbytheprimafaciesimilaritybetweenanexcisetaxandasharecontractoffersamarginalequalitywhichappearsattractive.Orperhapsthefrequentcondemnationsofsharecroppinginthelandtenureliteratureprovidedaconvincingimpressionofmisallocation.
Buttheinefficiencyargumentagainstshareleasesisonlyoneofseveralwhichhavebeenusedagainstthegeneralsystemoftenantfarming.Forexample,ahighrentistakenas"exploitation"thatdampensthetenant'sincentive,andshort-termleasesareregardedas"insecure"tenurethatinevitablyreducesinvestmentinland.Unfortunately,theseassertionsoftenhavebeentakenasfacts.Andmeasuresofagrarianreformshavebeenundertakenbygovernmentstorulesharecroppingillegal,tointerveneinthetermsofthecontract,ortoabolishfarmtenancyaltogether.
WhileIarguedthatthetheoreticalresultsofthetax-equivalentanalysisareerroneous,Ididnotclaimthatunattenuatedprivatepropertyrightsnecessarilyleadtoefficientresourceuseintherealworld.Certainly,decisionerrorsalonemaybewasteful.Butunderthespecifiedconstrainedmaximization,assumingzerotransactioncosts,thetheoryofsharetenancyderivedhereshowsthatsharetenancysatisfiestheParetocondition.Eventhoughtransactioncostsinfactexist,thetheorysucceedsinexplainingmuchoftheobservedfarmingbehavior.
Sinceavarietyofcontractualarrangementsexistunderprivateownershipsofresources,Ifurtherquestionedwhydifferentarrangementsarechosen.Byintroducingtransactioncostsandrisks,achoice-theoreticapproachtothisquestionwasadvanced.Thegeneralhypothesis—thatcontractualchoicesaremadetoattainthepreferreddistributionofrisksubjecttotheconstraintoftransactioncosts—wasexpoundedagainstthefactualbackgroundoftheChineseexperiencefrom1925to1940.Inthesameway,itwasarguedthatleasedurationsarechosentominimizetransactioncosts.