Thetheoryofsharetenancywasalsoappliedtoasituationinwhichtherentalpercentageisreducedtoauniformlegalmaximum,afrequentpracticeundervariousagrarianreformsinAsia.WithTaiwanchosenasanexample,thepertinentlawsoftherentalsharerestrictionwereexaminedandinterpreted.Equilibriumanalysiswiththeadditionofalegalconstraintonshareswasperformed.Twohypothesesstemmedfromthisanalysisandtestswereconstructedforboth.Thefirsthypothesis,thattherewouldbepensatingpaymentsandtenurerearrangements,wasconfirmedbytheexistenceoflawprohibitingthemandofprosecutionsofviolatorsofthelaws.Itservedasaprerequisiteforthesecondhypothesis,thatofincreasedfarmingintensity.
Theimplicationsofthesecondhypothesis,thattherewouldbemarginalinequalitiesofresourceallocationasaresultoftherentalsharerestriction,wasconfirmedbyobservationsofbothresourcereallocationandpatternsofoutputresponses.ThesharerestrictioninthefirstphaseofTaiwanlandreformledtoinefficientallocationofresources.
Ithasfrequentlybeenassertedthatstandardeconomictheorycannotbeappliedtoconditionsinunderdevelopedcountries.Exceptionshavebeenalleged,"irrational"behaviorhasbeendiscerned,andnewpostulateshavebeenadvancedtoexplainwhateverobservationsareregardedas"mysterious."Butausefultheoryofchoicecanbederivedonlyiftheconstraintsinvolvedarespecified.Intheliteratureof"underdeveloped"countries,recognitionandpropertreatmentoftherelevantpropertyrightconstraintshavebeenrare.
Withthemanyfacetsofpropertylawsgoverningresourceuse,itis,ofcourse,notalwayseasytodefinethesetofconstraintswithwhichtoidentifytheoptionsofchoice.Buttodevelopspecialtheoriestointerpretsomeallegedly"mysterious"observationswithoutinvestigatingthepertinentpropertylawsisunwarranted."Disguisedunemployment"andthe"dualeconomy"areexamplesofsuchspecialtheories.Iargue,inAppendixA,thattheincreaseintotalyieldowingtothesharerestrictionrefutedanyargumentthatdisguisedunemploymenthadexistedinTaiwanagriculture.Furthermore,underthesharerestriction,reallocationofnonlandresourcestoagricultureasawholeproduceda"dualeconomy."Yetthehypothesisofincreasedfarmingintensitywasderivedentirelyfromstandardeconomictheory.
Anumberofissuesrelatedtothisstudycouldbeinvestigatedfurther.InconjunctionwiththeagrarianreformsinAsia,twoimportanttopicscallforanalysis.Thefirstisaparativestudyofthevariouspropertylawsunderlyingthesereforms.Anunderstandingoftheirorigins,similaritiesanddissimilarities,therelativecostsofenforcingthem,and,perhapsmoredifficult,theeconomicforceswhichbroughtthemintobeing,willthrowlightontheformationofpropertyrights.Asecondtopicisthederivationofwhatonemightcallatheoryoffixedtenure,aimedatexplainingresourceallocationundertheconditionwheretherighttofarmisexclusivelyassignedtoindividualfarmersandtransfersofthisrightareprohibited.ThistheoryisneededtounderstandtheLand-to-the-TillerprogramsinTaiwansince1953aswellassimilarprogramsinseveralAsiancountriesduringthepastdecade.ThesametheorymaythrowlightonresourceallocationinfeudalEuropeandTokugawaJapan.
Thetheoryofsharetenancymayalsobeextendedtootherindustries.Notonlyaresharecontractsobservedinagriculture,buttheyarealsomonamongretailstores,beautysalons,gasolinestations,amusement-parkrentals,andeventhemuchregulatedoilandfisheryindustries.Ofcourse,whentheconstraintsofpetitiondiffer,modificationsneedtobemadeinthetheoryofsharetenancytointerpretresourceallocationintheseindustries.Onemightalsoapplythetheorytoasituationinwhichsomeresourceinasharecontractbelongstothestate.Forexample,inTaiwanbefore1951,aportionoffarmlandownedbythegovernmentwasleasedtotenantsonasharebasis;inmainlandChinainthe1950s,apopularformofbusinessfirminvolvedstate-privatecooperationwithsharingarrangements.
Finally,moreformalanalysesofthechoiceofcontractualarrangementsandoftransactioncostsareneeded.Aswasnotedinchapter4,Ifailedtoarriveatgeneralequilibriumsolutions,owingtoaninabilitytoderivesomespecifictransaction-costfunctionsandtodisentanglesomeproblemsofchoicetheoryinvolvingrisk.Whateverthecontractualarrangements,theproperapproachtoanalyzinglandtenureistoinvestigatethenatureofthepropertylawswhichdefinetheconstraintofpetition,andnotmerely,ashasfrequentlybeendone,tocondemnwhatmayappeartobedefectiveleasingarrangementsandtoadvocateachangeinthelaws.
APPENDIXES
APPENDIXA
SomeCommentsontheHypothesesofDisguisedUnemploymentandtheDualEconomy
AnumberofwritershaveattributedthesmalllandholdingsinAsia(andparticularlyinChina)tofamilyandsocialstructure.Othershavetakenthecrowdedfarmingconditionasevidenceofdisguisedunemployment(wherethemarginalproductivityofpeasantsissaidtobezeroornegative).Stillothershaveclaimedthatwhetherornotthemarginalproductivityofpeasantsiszero,theproductivityoflaborislowerinagriculturethanelsewhere.Varioushypothesesofdisguisedunemploymentandthedualeconomyhavebeendevelopedintermsoffamilystructure,ofunlimitedlaborsupply,ofpeculiarfixed-factorcoefficientproductionfunctionsowingtothepeasants'ignoranceoffarmingmethods,andofa"rock-bottom"subsistencetheory.Someinsistthatitistheaverageproductandnotthemarginalproductwhichunderliesfarmingdecisionsinunderdevelopedareas.[1]