From the above Schickele（and Heady after him）claimed that part of the nonland inputs must be shared by the landowner to attain efficient resource use.A general rule of"efficient"input subsidization by the landowner was sought.Using a 50 percent rental share（r=0.5）,and using the horizontal axis of figure 4 to measure nonland inputs in general,Schickele concluded that"if the landlord would share equally in all the input costs going into crop production the intensity would be carried to[t2],that is,to the same degree which corresponds to maximum efficiency."[19] Its economic content aside,what could have been merely a geometric"accident"was compounded into an illusion by Heady.Heady converted
and
（1-r）into marginal（output）cost curves,but with the curves arbitrarily drawn.[20] Thus,on Schic-kele's proposal.Heady generalized:"The cost of variable factors（where one factor such as land is fixed）must be divided between the landlord and the tenant in the proportions that hold for the division of the product[to attain efficiency]."[21] Let me clarify.
Return to figure 4,where we use r=0.4.Suppose the rental percentage,r,is 0.5（that used by Schickele）.Schickele seems to have thought that tx would necessarily divide the distance Ot2into two equal parts.Thus,if the landowner contributes nonland inputs from t1to t2,he would then be sharing exactly half the nonland input cost-or sharing it"in the proportions that hold for the division of the product."But this is wrong even if the marginal product curve is linear.The marginal tenant receipt curve,recall,is 1—r of
at every point,measured vertically.And only at one point will the same percentage hold for a hori-zontal measure.What is interesting here is not the geometric illusion itself,but a paradoxical result one obtains without it:Given any rental percentage,and a wage rate just high enough to reduce tenant input to zero（according to the tax-equivalent analysis）,the value of land is still positive（since the total product is still greater than the total wage）.Would it be sensible to say,then,that in certain cases the value of land to the tenant is posi-tive but he is not willing to offer any share payment for its use?
It is not clear what is meant by"custom"in its usage by Schic-kele and Heady in their discussions of land tenure.Whereas Mill had visualized"custom"only as something noncompetitive,Schickele and Heady referred to both"custom"and"compe-tition"in their analyses of share tenancy.One interpretation is that by"custom"they meant a situation where the postulate of wealth or utility maximization does not apply.Yet without any such behavioral postulate,the meaning of competition cannot be defined.To complicate the matter,at times the postulate of maximizing behavior is implicit for the tenant but not for the landowner.This is explicitly stated by Charles Issawii in his analysis of share tenancy.Concluding also that equilibrium is at A（see figure 4）,Issawii admitted that,in his analysis:
It has been implicitly assumed throughout……that landlords do not respond readily to such economic motivations as the possibility of increasing their income by investment;if they did,the distinction between fixed rents and share-cropping would,naturally,lose most of its significance.In the past this assumption has,to a large extent,held true for most underdeveloped countries and,to a slightly lesser extent,it still holds true.[22]
This kind of analysis is quite popular in"underdevelopment"literature.And one wonders how an analyst following Marshall would fare should he discard the idea of custom.We find this in a study by D.Gale Johnson.[23] Johnson formalized Marshall's analysis in greater detail,and his equations led him.to conclude:
Under a crop-share lease,if the landlord's share of the crops is half,the tenant will apply his resources in production of crops until the marginal cost of crop output is equal to half the value of the marginal output.The same tenant,however,will conduct his livestock operations,where important costs are borne by the landlord and the receipts are not shared with him,in the usual manner.The landlord will not invest in land assets unless the value of the marginal product is twice the marginal cost.[24]
Johnson noted,however,that his analysis is based on"circumstances in which……the tenant and the landlord……each views his interest separately,"[25] which is similar to Marshall's supposition that the tenant"is free to cultivate as he chooses."This supposition,of course,renders the meaning of a contract nebulous.What is interesting here is that even if we accept this supposition,Johnson's conclusion is founded on a set of constraints which are difficult to specify.This will be shown in the next section.
But Johnson was reluctant to accept the implication of inefficient resource use under a share contract,and he devoted one section to investigating other possible adjustments.[26] He found that,"though admittedly inadequate,the available evidence indicates that the crop-share contract yields at least as much,if not more,rent per acre than does the cash lease on comparable farms."[27] In an attempt to reconcile this apparent conflict between theory and fact,Johnson argued that with a short-term lease the tenant is not really free to cultivate in anyway he sees fit.[28] Thus,the actual intensity of tenant input"will depend upon what he thinks'he can get by with'."[29]
It is difficult to understand why Johnson did not discard his theoretical analysis and start anew-by considering that the contracting parties are free only to accept or not to accept a contract,and that they"can get by with"only as much as the restraints of competition allow.These choices are exactly the same as fixed rent and wage contracts,which are implied by the constraints of private property rights,and which Johnson had in mind.A theory constructed on these rights will reveal that the terms of a share contract are expressed through the market-determined rental percentage and ratio of nonland inputs to land.Yet on this point Johnson was in doubt: