Question

Suppose the tenant-landlord relationship involves sharing of costs (e.g. application of fertilizer at different times). Show (using graphs) that sharecropping might be efficient in this case. (Hint: split both the cost curve and output curve).

Answer 1

Compared to fixed rent contract sharecropping is ineffective since less than optimal labor is supplied. But if inputs are shared then marginal cost are lower and we get more labor effort supplied as compared to the case without input sharing.

Yes it is true that this may not lead us back to the exact original equilibrium as in fixed rent case but just that there is possibility that it might be so  that sharecropping might be efficient in this case.

If inputs are shared, MC is lower. Labor supply also increases. Where L falls will be ambiguous, somewhere in between the efficient output level and above sharecropping output level.