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Details
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| Country:
| Pakistan ; |
| Doc Name:
| Incomplete contracts and investment : a study of land tenancy in Pakistan |
| Keywords:
| adverse selection, agricultural land, agriculture, asymmetric information, contract theory, contractual arrangements, cost functions, credit, discount rate, diseconomies of scale, eviction, expropriation, households, human capital, incentive effects, Incomplete Contracts, inefficiency, investment behavior, investment incentives, land tenure, landlord, landlords, landowners, lease, leasing, liability, Maximum likelihood estimation, moral hazard, opportunity cost, optimal contract, production efficiency, production function, property rights, rents, return on investment, risk, risk aversion, risk-neutral, statements, Tenancy, tenants, wealth Show More |
| Language:
| English |
| Region:
| South Asia ; |
| Rep Title:
| Incomplete contracts and investment : a study of land tenancy in Pakistan |
| Topics:
| Law and Development ; Macroeconomics and Economic Growth ; Urban Development ; Communities and Human Settlements |
| SubTopics:
| Economic Theory & Research ; Municipal Housing and Land ; Real Estate Development ; Investment and Investment Climate ; Contract Law |
| Unit Owning:
| Development Research Group (DECRG) |
| Collection Title: | Policy, Research working paper
; no. WPS 3826 |
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Abstract
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| When contracts are incomplete, relationship-specific investments may be underprovided due to the threat of opportunistic expropriation or holdup. The authors find evidence of such underinvestment on tenanted land in rural Pakistan. Using data from households cultivating multiple plots under different tenure arrangements, they show that land-specific investment is lower on leased plots. This result is robust to the possible effects of asymmetric information in the leasing market. Greater tenure security also increases land-specific investment on leased plots. Moreover, variation in tenure security appears to be driven largely by heterogeneity across landlords, suggesting that reputation may be important in mitigating the holdup problem. |
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 PDF | 35 pages | Official Version | [0.48 mb] |
 Text | | Text Version* | |
| *The text version is uncorrected OCR text and is included solely to benefit users with slow connectivity. |
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