Foranyresource,iveusesoftheresource,butalsoofdifferenttransactioncostsassociatedwimarketplace;[6]thereso,petitionconglomeratesknowledgefromallpotentialowners-theknowledgeofalternativecontractualarrangementsandusesoftheresource;andtransferabilityof,www.youxs.org.
Intheabsenceoftransactioncosts,thatstateofresourceallocationunderwhichitisnolongerpossibletoreallocateresourcestobenefitoneindividualwithoutanotherslosing(thatis,theParetocondition),however,resourceallocationinconformitywiththeParetoconditionneednotsatisfythesamesetofmarginalequalities.[7]Althoughitisdifficult,ifnotimpossible,toseparateonetypeoftransactioncostfromanother,itmaynonethelessbeusefultodistinguishtwotypesofmarginalinequalitiesgeneratedbythepresenceoftransactioncosts.
Thefirstmayberegardedasbeingamongfirms;thatis,thesamefactorinputyieldsd,withtransactioncoststheremaynotexistauniformfactorpriceinthemarket,resourcerights,theresourcevaluecanonlybeexpressedintermsofanonpecuniarymeasure.
Asecondtypeofmarginalinequalitymayberegardedasbeingwithinthefirm;thatis,themarginalproductofafactoremployedby,,alandowner,inlettinghisscarcewaterresourcetoatenant,maycquantification(throughmeteringorotherdevices)issohigh(owingto,say,thephysicalattributesofwater)astomakealternativearrangementsinefficient.[8]Underthisformofcontractualpayment,thewaterresourcewillbeusedbythetenantuntilitsmarginalproductiszero,ontracting,,ifthegainfromchoosinganothercontractualarrangement(www.youxs.org)hadbeengreaterthanthecostofquantifyingtheuseofwater,somemeteringdevicewouldhavebeenadoptedandthecontractwiththelump-sumpaymentabandoned.[9]
Efficientallocation,therefore,requiresthateachresourcebeusedinthehi,ents,the”highest-valuedoption”
Theexisten,theytendtoreducethevolumeoftransactions,thusimpairi,theymayaffectmarginalequalities(andintensities),
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Considerthethreemainformsofcontractsinagriculture;namely,afixed-rentcontract(rentperacrestatedincashorincrop),asharecontract,,,sharecontractsweremorefrequentthanfixedrentsinTaiwanandSoutheastAsiabeforetheagrarianreforms;inChinafixedrentsweremorefrequentthansharerentsinthe1930s;inJapan,fixedrentspredominated;andingeneral,wagecontracts(farmhands)havebeeninfrequent,oc-curinginabout1to5percentofthefarminghouseholdsinvariouslocalities.[10]Whydothepatternsofcontractualchoicesdiffer?Whatdeterminesthechoiceofcontracts?