Bargaining and efficiency in sharecropping

In this paper the Nash bargaining solution is used to derive solutions for the rental share and labour input in sharecropping. The bargaining is model ed as a two-stage process. First there is a bargain about the rental share, and then a bargain about labour input. The power of the landlord to ensure an outcome favourable to himself may differ in the two stages. By imposing particular assumptions about this bargaining power, some popular models of sharecropping, that have been treated as completely separate in the litera ture, can be derived as special cases in our model. However, we also genera te a near class of models. It is also demonstrated that it is not the tenan t's influence in the labour input decision per se which causes inefficiency in sharecropping, but differences in the tenant's influence over different issues in the contract. This is in contrast to the popular view which stat es that if the tenant controls the level of labour input, sharecropping wil l result in an inefficient resource allocation.