The aim of this paper is to develop a theory of sharecropping with cost sharing after allowing for an explicit role of a creditor. In the tenancy literature, the prevalence of…
Abstract
Purpose
The aim of this paper is to develop a theory of sharecropping with cost sharing after allowing for an explicit role of a creditor. In the tenancy literature, the prevalence of sharecropping has remained an important issue. While most contributions have focussed only on output sharing, very few have studied the issue of cost sharing. Besides, the existing models have considered interactions only between a landowner and a tenant. The purpose of this paper is to extend this setup to a third player – creditor.
Design/methodology/approach
The authors adopt a static contract approach with full information and no uncertainty and model possible credit‐cum‐tenancy arrangements among a money‐lender, a landowner and a tenant under the restrictions that the money‐lender cannot charge a lump‐sum fee and the input choices are left with the tenant.
Findings
It is shown that all Pareto optimal arrangements between a creditor, a landowner and a tenant must involve interest rate discrimination between the tenant and the landowner and a share tenancy with cost sharing, or a fixed rent tenancy with cost sharing, or a mixture of the two. None of the polar contracts – wage or rent – is possible. Lending schemes that feature credit rationing or credit delegation can implement some Pareto efficient outcomes.
Originality/value
The model developed in the paper presents a framework for studying various tripartite arrangements observed in rural economies of developing countries. Also, it provides a benchmark for studying contracts under asymmetric information and uncertainty.
Details
Keywords
Bibhas Chandra Giri and Sushil Kumar Dey
The purpose of this study is to investigate the impact of greening and promotional effort dependent stochastic market demand on the remanufacturer's and the collector's profits…
Abstract
Purpose
The purpose of this study is to investigate the impact of greening and promotional effort dependent stochastic market demand on the remanufacturer's and the collector's profits when the quality of used products for remanufacturing is uncertain in a reverse supply chain.
Design/methodology/approach
The proposed model is developed to obtain optimal profits for the remanufacturer, the collector and the whole supply chain. Both the centralized and decentralized scenarios are considered. To motivate the collector through profit enhancement, the remanufacturer designs a cost-sharing contract. Through numerical examples and sensitivity analysis, the consequences of greenness and promotional effort on optimal profits are investigated.
Findings
The results show that the remanufacturer gets benefited from greening and promotional effort enhancement. However, a higher value of minimum acceptable quality level decreases the profits of the manufacturer and the collector. A cost-sharing contract coordinates the supply chain and improves the remanufacturer's and the collector's profits. Besides green innovation, remanufacturing mitigates the harmful effects of waste in the environment.
Originality/value
Two different viewpoints of remanufacturing are considered here – environmental sustainability and economic sustainability. This paper considers a reverse supply chain with a remanufacturer who remanufactures the used products collected by the collector. The quality of used products is uncertain, and customer demand is stochastic, green and promotional effort sensitive. These two types of uncertainty with green and promotional effort sensitive customer demand differs the current paper from the existing literature.