[24].Ibid.,www.youxs.org.,”PeasantsandDualismwithorwithoutSurplusLabor,”JournalofPoliticalEconomy(October,1966),www.youxs.org.
[25].Johnson,”ResourceAllocation,”www.youxs.org.
[26].Ibid.,v.,www.youxs.org.
[27].Ibid.,www.youxs.org:
Ihaveestare-rentedthanoncash-rentedfarms.
[28].Ibid.,www.youxs.org.
[29].Ibid.,www.youxs.org
[30].Ibid.,www.youxs.org.
[31].Ibid.,www.youxs.org.
[32].Ibid.,www.youxs.org.
[33].Ibid.,www.youxs.org.
www.youxs.org
Toclarifythebasicdifferencebetweenthetheoryofsharetenancyderivedinthelastchapterandthetax-equivalentanalysis,,,
,andthemarginaltenantreceiptundersharerent,
(1-r).Accordingtothetax-equivalentapproach,equilibriumisatA,withtheamountoftenantinputequaltot1.
Infigure5,assumeagivenlandareawhichweholdfixedfor.
=www.youxs.org
(1-r),ift2oftenantlaboriscontractuallystipulated,thelandownersshareofthetotalproductintheformofrentequalsareaEDBC,,thetenantsshareisstillhigherthanhisalternativeearning(areaOMBt2),withareaMEAgreaterthanareaABC,whichmeansthatthetotalrent(areaEDBC)willbesmallerthanthatofawageorafixed-rentcontract(areaMDB).Giventhemarginaltenantreceipt,
(1-r),thecorrespondingaveragetenantreceiptwillbe(q/t)(1-r),whichis40percentoftheaverageproductoftenantlabor,q/t,,thelandownercansuccess-fullystipulatethatthetenantworkuptot3wheretheaveragetenantreceipt,(q/t)(1-r),equalsthewagerate,implyingthatthetenantsinefromfarmingisequaltohisalternativeearning.
Withtenantinputt3,however,thetotalrentreceivedbythelandownerwillbeequaltoareaMDBminusareaBNP,anamountofrentsmallerthanthatofownercultivation,nantcost,thelandownerwillthusraisetherentalpercentagetor*.Thechoiceofr*lowersthemarginaltenantreceipttothedottedlineGF,withareaMGKequaltoareaKBLThecorrespondingaveragetenantreceiptwillbe(q/t)(1-r*),whichnecessarilycutsthemarginalproductoflabor,
,www.youxs.org(whichequalsareaMDB),andthetenantsshareequalsareaOGIt2,whichisnogreaterthanhisalternativeearning(areaOMBt2).Theequilibriumconditioncanbeiden-tified:atBwehave
wherer*istheequilibriumrentalpercentage.[1]Indeed,oneofthemainsourcesofconfusioninthetaxapproachisthemarginaltenantreceiptcurve,
(1-r).Importantasitmayseem,itisonlyillusoryfordecisionmakingunderunrestrainedprivatepropertyrights.
Indeed,acloseranalysisrevealsthatpositionAisnotanequilibrium,evenifwefollowthetax-equivalentapproachtoanenantinputperacre,(infigure5),thetenantwillchoosetodispersehisinputresourceovermanyfarmsuntilhisinputendowmentisexhausted,insuchawaythathismarginaline(ormarginaltenantreceipt)fromdifferentfarmsisequal.[2]Inthiscase,thetenantwillbereceivinganaggregateinehigherthanhisalternativeearning,andothertenantswillentertopete.
msalso,,themarginalinefromdifferentfarmsforeachtenantwillfall,antishigherthanthealternativeearning.[3]Given
(1-r)asdrawn,andassumingthatthelandownerscontractuallyacceptanyamountoflabor,petitionamongtenantswillpushlaborinputoneachfarm(onesuchfarmisrepresentedbyfigure5)”overcrowded”,wealthmaximizationimpliesthatthelandownerswillchooseamongtenantswhoofferrentalpercentagesashighasr*,*whichdefines
(1-r*),theamountoftenantlabnantlaborineachfarmequalsthemarginaltenantcost(pointBinfigure5).