Toillustrate,,thelandownerwillbeabletochargearentequaltothemaximumof(q-f)/hperacre,orar,andthearearentedbythetenantwillagainbeT1,/handf/hasshown,ifanarealargerthanT1isrented,,ifanareasmallerthanT1isrented,t,underfixedrent,thelandsizeperfarmandtherentalannuityreceivedbythelandownerwillbeexactlythesameasundersharetenancy.[1]Furthermore,ifthesamecropsaretobeplantedonthesamegradeofland,havingthesameproductionfunction,thetenantunderfixedrentwillhavetomitthesamef/,ifonetenantdoesnotpossessthenecessaryamountofinputs,hemayacquirethemthroughvariousmeansorrentafarmwhichrequireslessfarminginputs.
Letusalsopressthequestion:Undersharetenancy,whatcriteriawillthecontractingpartiesuseinarrivingattheequi-libriumlandsizeandrentalpercentageforeachtenant?Clearly,themostefficienttypeofcropstobeplantedonthegivenlandmustbechosen,andthetenantinputsrequire,erroneousdeci,however,thatsome,thereexist,atprevailingmarketpricesoflandandotherfactorsofproduction,certainbinationsoftenantinputrequirements,rentalpercentages,andtenantlandsizes.
Indeed,givenfreelyalienable(marketable)landrightsunderprivateownership,,iftherentalpercentageistoolow,thelandsizepertenanttoolarge,orthetenantinputsrequiredtoolittle,therentalannuityasaret,thelandownerwilleithermaketheproperadjustments,leasethelandtoadifferenttenant,chooseadifferentcontractualarrangement,,ifthecontractualagreementsaresuchthatthetenantisreceivingasharelowerthanhisalternativeearning,otherlandownerswillbidhisservicesaway,orthetenantmayturntowagelabor.
Aswithpetitionamonglandowners,petitionamon,bycheckingtheoutputalonethelandownerwillknowwhetherthecontractedtermsarerespectedb,however,thetransactionsarefrequenldmakenodecisionandthereforewereexploited,itisrefreshingtopointoutthat,inChinaatleast,sharecontractingwasratherpolite:
Assoonasthegrainisthreshedthetenantinvitesthelandlordtoafeast,afterwhich,hetakesthesailsfromthewindmilljustbeforethelandlordestothetenantsfeastasasigntothelandlordofhisintentions.[2]
Ouranalysisthu,inwhichwediscusspr,andperformtestsofimplicationsforalternativetheories.
[1].Forstillanotherexpositiononthis,seechapter3,sectionC.
[2].(Chicago:UniversityofChicagoPress,1930),www.youxs.org.
www.youxs.org
Perhapsthetheoreticalresultsreachedintheprecedingchapterwouldhavebeenobtainedbyea,asrent,ityieldstheimpressionofbeingsimilartoanadvaloremexcisetax-wherepartofeveryunitproducedis”taxed”bythelandowner(government).Thedistributionofoutputisnotthesame,itisbelieved,aswithfixedrentorow,therefore,issaidtoresultinlessintensive(andlessefficient)farmingbecausethetenantsincentivetoworkorinvestinlandisreduced.[1]
Itisnotdifficulttoshowthattheapplicationoftheanalysisofataxtosharetenancy(hereaftercalledthe”tax-equivalent”approach),thewritersgenerallyfailtorealizethatthepercentagesharesandarearentedundersharetenancyarenotmysteriously”fixed”,thesewritersfailtospecifythenatureo