Description

Abstract: The modern theory of agrarian organization has studied how the economic environment determines organizational form under the assumption of stable property rights to land. The political economy literature has modelled the endogenous determination of property rights. In this paper we propose a model in which the economic organization of agriculture and the political equilibrium determining the distribution of property rights are jointly determined. In particular, because the form of organization may affect the probability and distribution of benefits from agrarian reform, it may be determined in anticipation of this impact. The model offers a reason for why tenancy, despite its economic advantages has been so little used in countries where agrarian reform is a salient political issue. We argue that this in particular helps to understand the dearth of tenancy and the relative failure of land reform in Latin America.