Property Rights and the Political Organization of Agriculture

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 analyze a general equilibrium 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. Property rights may then be secured at the expense of economic efficiency. The model provides a framework for understanding why in some contexts the redistribution of land is chanelled primarily via land sale and tenancy markets but via politics and conflict in others. We test some implications of the theory using a five-decade panel that traces changes in the extent of tenancy over five decades across fifteen Indian states.