Introduction - The Nature of the Farm - page 15

experiment stations at land grant universities have collected data on such issues. 37 Most of
this work either predated Coase's work on the firm and social cost or was conducted without
explicit recognition of it. Quite often the work is based on transaction cost ideas or has a
subtext of costly information, but these issues are never directly mentioned.
Among modern agricultural economists who study North American agriculture, the focus
has not generally been on contracts and economic organization, but on neoclassical analyses
of costs, production, commodity markets, and the effects of agricultural policies. In the
past decade, however, this began to change. For example, there have been analyses of
contracts in poultry (Knoeber and Thurman 1994; Tsoulouhas and Vukina 1999), vegetables
(Hueth and Ligon 1999), and vertical coordination (Frank and Henderson 1992; Hennessy
1996). This and related literatures are carefully summarized in Knoeber (2000); other less
extensive summaries are found in Sexton and Lavoie (2001), Deininger and Feder (2001),
and Vercammen and Schmitz (2001). To the extent that modern agricultural economists have
examined issues of economic organization, they have relied more on risk-sharing arguments
than on transaction costs. As a result this literature is quite distinct from the analysis in this
topic. 38
In addition to agricultural economics, there is a considerable literature on farm contracts
and organization in economic development and in economic history. In economic devel-
opment, cropsharing has been a focus of analysis ever since Stiglitz's (1974) paper. This
literature, like that in agricultural economics, has been dominated by risk-sharing models
and an emphasis on theory over empirical work. 39 In recent years, however, there has been
less emphasis on risk sharing and more discussion of multiple incentive margins (for ex-
ample, Dubois 2002). In economic history, of course, agricultural topics are a mainstay,
and discussions of contracts and farm organization are common. Transaction cost models
have been much more prevalent in economic history than in other fields, perhaps because
of the influence of Nobel Laureates Robert Fogel and Douglass North. Historical issues of
slavery and serfdom obviously suggest the importance of property rights, and thus have led
scholars to transaction cost economics. 40

1.5 Organization of the topic

All substantive chapters (3-9) contain both a theoretical model and empirical analysis.
Although there is a natural progression in the chapters, the topic is analytically divided into
three parts. Part I examines contract choice using the transaction cost paradigm, focusing
on explaining the prevailing simplicity of contracts and the choice between cropshare and
cash rent agreements. We show how land leases exist in a context where reputation and
the common law are important. These factors allow farming contracts to be relatively