Inthiscaseweseethefermiers,athirdparty,interposingbetweenlandlordsandtenantstoprovideamorecertaininefortheformer.[17]Tomyknowledge,nosimilararrangementexistedinChina,thoughanotherpracticeprevailed（seenextsection）.InJapan,sharetenancyhasbeenrare;and,atthesametime,apulsorycropinsurancesystemhasbeenenforced.[18]
2.InChina,sharetenancyreportedlywasmorefrequentinthewheatregionthaninthericeregion.TakingthehectareyielddataofwheatandricecropsinTaiwan,wefindsignificantlyhigherproportionalvariancesforwheatthanforrice.Thisisshownintable1.Owingtothelackofpricedata,onlythevari-ancesofphysicaloutputareputed,althoughvalueofoutputwouldbeamoreappropriatemeasure.
Intable1,
,whereXiisthehectareyieldinkg.,andnthenumberofyears.Thehigherfrequencyofsharecontractsamongwheatcropsappearstobeauniversalphenomenon.[19]
3.AccordingtothreeindependentsurveysconductedinChina（1930-35）,sharerentisgenerallyslightlyhigherthanfixed（crop）rent,[20]andthispremiummayberegardedasareturntothelandownerforriskbearing.
Letmesummarize.Thepostulateofgeneralriskaversionortheminimizationoftransactioncosts,takenseparately,donotexplainwelltheobservedcoexistenceofseveralformsofcontracts.ForthisreasonIuseboth,andthechoiceofcontractsisdeterminedbyweighingthegainsfromriskdispersionandthetransactioncostsassociatedwithdifferentcontracts.Twofactorsappeartobeimportantinexplainingdifferentpatternsofcontractualchoicesindifferentlocalities.First,differentphysicalattributesofcropsandtypesofclimateoftenresultindifferentvariancesofoutputsindifferentagriculturalareas.Second,differentlegalarrangements,suchaspulsoryorsubsidizedcropinsurance,affectthevariancesofineaswellasaffectingtransactioncostsforthecontractingparties.Anexaminationofsomecontractualdetailsinthenextsectionwillsuggestathirdfactor:differentmarketarrangementsalsoaffectthechoiceofcontractualforms.
[1].Ifonlyoutrighttransfersexistforallresources,"owner"productionwillexistforallfirms.Contractingforoutrighttransfersdoesnotconcernushere.
[2].SeeRonaldH.Coase,"TheNatureoftheFirm,"Economica（November,1937）.
[3].Portfolioselectionisaplicatedsubject.Thetwomajorthesesthathavebeenadvancedcenteronanticipatedchangesinthegeneralpricelevelandontheaversionofrisk.Transactioncostsmayimplyathird.
[4].Whilethisconcepthastheadvantageoftreatingriskasameasurablequantitythatcanbeconvenientlyappliedtoobservations,italsohassometheoreticaldifficulties.See,forexample,JackHirshleifer,"InvestmentDecisionunderUncertainty:Choice-TheoreticApproaches,"QuarterlyJournalofEconomics（November,1965）.
[5].Transactioncostsmayalsodependonotherfactors,suchasthenumberofparticipantsandtransactions,whichIshallnotexplorehere.Changesinpricesandinnovationswillalsoaffectthecostsoftransactions.See,forexample,TheodoreW.Schultz,TransformingTraditionalAgriculture（NewHaven:YaleUniversityPress,1964）,chap.11.
[6].AnanalysisofmarketinformationisavailableinGeorgeJ.Stigler,"TheEconomicsofInformation,"JournalofPoliticalEconomy（June,1961）.
[7].SeeHaroldDemsetz,"TheExchangeandEnforcementofPropertyRights."JournalofLawandEconomics（October,1964）.Demsetz'sworkconstitutesanimportantreinterpretationofFrancisM.Bator,"TheAnatomyofMarketFailure,"QuarterlyJournalofEconomics（August,1958）.
[8].Similararrangementsarefoundinconsumption.Forexample,inapartmentrentalsthecostofutilitiesisfrequently"paid"byanamountaddedtotheapartmentrent;restaurantsservingbuffetsallowcustomerstoeatasmuchastheypleaseafterpayingalump-sumcovercharge.
[9].Marginalinequalitywithinafirm,asinthecaseoflump-sumcharges,mayalsoresultinmarginalinequalitiesamongfirms.Forexample,ifthesamewaterresourceinotherusesisunderacontractthatstipulatesaunitprice,themarginalproductofwaterunderthelump-sumchargeswillbelowerthanthatelsewhere.
Themarginalquantitiesunderdiscussionarethosewhichwouldbeequalateverymarginshouldtransactioncostbezero.Ifweignorecornersolutions（asimpliedintheexampleoflump-sumcharges）,itispossibletodefineadifferentsetofmarginalquantitiesbyincorporatingtransactioncostsinsuchawaythatadifferentsetofmarginalequalitiescouldbeobtained.
[10].ForthesituationinChina,seeJ.L.Buck,LandUtilizationinChina（Chicago:UniversityofChicagoPress,1938）,p.198.ForJapan,seeR.P.Dore,LandReforminJapan（London:OxfordUniversityPress,1959）；forotherpartsofAsia,seesourcescitedinchapter1,notes10and14.
[11].Seechapter2.SamplesofsharecontractsobtainedfromChina（seenextsection）areconsistentwiththisstatement.