Bandiera, Oriana (2002) Land distribution, incentives and the choice of production techniques in Nicaragua. 34. Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science, London, UK.
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Does the distribution of land rights affect the choice of contractible techniques? I present evidence suggesting that Nicaraguan farmers are more likely to grow effort-intensive crops on owned rather than on rented plots. I consider two theoretical arguments that illustrate why property rights might matter. In the first the farmer is subject to limited liability; in the second the owner cannot commit to output-contingent contracts. In both cases choices might be inefficient regardless of land distribution. The efficiency loss, however, is lower when the farmer owns the land. Further evidence suggests that, in this context, the inefficiency derives from lack of commitment.
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