Steven Cheung chose share tenancy as the subject onwhich to concentrate. It was a happy choice, for three reasons.First, it was (and still is) an important form of governancein agriculture, as well as in various service trades.Second, share tenancy contracts display problems typical of abroad spectrum of contractual arrangements: today theseproblems are often discussed under the “principal-agent”label. Third, previous conclusions on share tenancy seemedtoo simple, even suspect: it was therefore necessary for themto be reconsidered. Not only did Cheung proved that he was amaster of the new theoretical framework, to a significantextent, he codified it. The Theory of Share Tenancy is convincingbecause of the author's grasp of the large literature onsharecropping, his careful analysis, and his meticulous use ofempirical material derived from an extensive range ofsources. Its major conclusion is now part of the body of economictheory: the results of literally all previous studies wereunconvincing, and their claims that share tenancy contractsare inefficient were illusory. This dealt the death-blow to thehabit of economists of declaring a situation inefficient, evenwhen they were unable to specify any feasible means to eradicatethe supposed inefficiency. They had ignored the verytangible cost constraints, which rationally prevented the stepsfrom being taken.
Finally, The Theory of Share Tenancy is exciting reading.
The author passionately believes in his subject and inwhat he is doing, and all through the book the reader eagerlylooks forward to what will be revealed next. Not many economictreatises have that tinge of adventure.
Stockholm, May 2000
To My Father
In Grateful Memory
PREFACE
Four years ago I accumulated material on property laws and agricultural data from Asia.My hope was to integrate the information with economic theory for my doctorate at the University of California,Los Angeles.I would have failed in this endeavor except that my advisers persuaded me to concentrate on only two sets of property right constraints defined by law in agriculture and on the associated leasing arrangements.
Even that limited task was difficult.The rental share restriction imposed by the Taiwan government led to output increases in tenant farms,an observation which was at first sight inconsistent with economic theory.Prolonged investigations were made of the reliability of the data and of an explanation other than the rental share restriction for the output increases.When this failed,I decided to use standard economic principles to formulate hypotheses relating to share tenancy（or sharecropping）.Having completed the first draft of my thesis,however,I found myself interested in land tenure arrangements in general as much as in specific agrarian reforms.Further investigations were made and revisions followed.The outcome is this book.
For generations economists and land tenure writers have sought to rank the relative efficiency of resource use under different leasing arrangements.For example,share tenancy has long been considered inefficient,as have leases of relatively short duration.Indeed,tenancy in general has been regarded as less efficient than owner cultivation.Writers in development economics have frequently asserted that standard economic theory cannot be applied to conditions in underdeveloped countries.Exceptions have been alleged,"irrational"behavior has been discerned,and special theories such as"disguised unemployment"and the"dual economy"have been advanced.These analyses,however,have ignored the relevant property right constraints.My disagreement with their conclusions is only natural.
Every transaction involves a contract.The transactions conducted in the market place entail outright or partial transfers of property rights among individual contracting parties.The contractual arrangements through which these transfers are negotiated are several and varied.Instead of ranking the relative efficiency of these arrangements,I show that such ranking without reference to the property right constraints is futile.Furthermore,I seek to explain（1）why the patterns of agricultural output differ under two sets of property right constraints,and（2）why different contracts are chosen under the same property right constraints.
As a student at UCLA,I repeatedly audited the price theory lectures of Armen A.Alchian and Jack Hirshleifer.Their influence on my thinking has been profound.They and Robert Rooney guided me in my dissertation.Others who gave me valuable encouragement include Evsey Domar,Mason Gaffney,Judith Mann,John Pippenger and Michael Thomson.Eldon Dvorak,then a colleague at California State College at Long Beach,came to my aid almost daily.For the final elaborate revision,D.Gale Johnson and Theodore W.Schultz have allowed me to consume their human capital lavishly.Harry G.Johnson read and commented on the entire manuscript.Chapter 4 was written last,and received the additional benefit of advice from Ronald H.Coase,Harold Demsetz,John McManus,and George J.Stigler.My research assistant,Patricia Kuttner,bore most of the burden of proofreading and compiling the index.
Several organizations in Taiwan kindly provided me with valuable data,including the Sino-American Joint Commission on Rural Reconstruction,the Taiwan Provincial Land Bureau,the Department of Agriculture and Forestry,and the Bank of Taiwan.
The Economics Department and the Library of California State College at Long Beach made their research facilities available to me,as did the oriental libraries at Berkeley,Stanford,UCLA,and Chicago.