Agriculture Reference
In-Depth Information
Table 5.6 shows the input-sharing rules breakdown for the entire sample of 1,628 con-
tracts. The upper section of the table shows all eight inputs, while the lower part distinguishes
between market and nonmarket inputs. The entry in each cell shows the number of contracts
(out of the 1,628 total) that satisfy the respective numbers of inputs that are shared in the
same proportion as the crop (horizontal axis) and those that are fully the responsibility of the
farmer (vertical axis). For instance, the entry “220” at the intersection of row 5 and column
3 indicates that 220 of the 1,628 contracts have five input shares equal to the cropshare, with
the remaining three inputs fully the farmer's burden. The entry in row 0, column 8 shows
that 209 contracts stipulated that all eight inputs were paid fully by the farmer; by contrast,
the entry in row 8, column 0 shows that 24 contracts required all inputs to be shared exactly
the same as the crop.
Prediction 5.1 implies that the contract entries should lie on the diagonal. As is evident
from the table, this is the overwhelming outcome. In fact, 1,405 (86%) of the contracts
meet this test. The diagonal just to the left of the main diagonal (the 7-7 diagonal) is also
supportive. The 7-7 diagonal shows the number of contracts for which seven of the eight
inputs fit the predicted dichotomy. If these contracts are included, the dichotomy covers
1,525 (94%) of the contracts. Again, the dichotomy is self-evident from the lower section
of the table, which separates market from nonmarket inputs. For market inputs, 1,456 (89%)
contracts are on the main diagonal; for nonmarket inputs, 1,432 (88%) of the contracts are on
the main diagonal. If contracts on the 3-3 diagonal are added, then the numbers are 1,540
(95%) for market inputs and 1,552 (95%) for nonmarket inputs. Table 5.7 breaks down
the contracts even further into contract groups that have identical cropshares (50-50, 60-
40, and 67-33, respectively). In all cases the main diagonal accounts for between 91 per-
cent and 96 percent of the contracts. Including the 3-3 diagonal accounts for between 96
percent and 99 percent of all contracts.
Tables 5.6 and 5.7 also confirm prediction 5.5 about market versus nonmarket input-
sharing rules. Market inputs are easier to measure, so we expect their sharing to be equal
more often than nonmarket inputs to the output share
(q = s)
. Nonmarket inputs are more
likely to be the full responsibility of the farmer
. All four tables support this
prediction, which can be tested by examining the main diagonal of the tables. For market
inputs we expect to see a greater portion of the contracts on the lower left portion of
the diagonal (where
(q =
dominates); for nonmarket inputs we expect a greater portion
on the upper right section (where
q = s
100 dominates). Inspection shows this to be true.
For example, when all contracts are considered, the lower part of table 5.6 shows that
233 contracts (14%) have all four market input shares equal to 100 percent, whereas
723 contracts (44%) have all four nonmarket shares equal to 100 percent. Similarly, 310
contracts (19%) have all four market input shares equal to the cropshare, whereas only 22
q =
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