Abstract
Abstract Partnerships among individual farmers might be an option to secure the viability of the firm as well as to enhance profitability. In this paper, incentives for collaboration are analyzed by deriving the set of Pareto optimal share contracts for two cases representing partnerships between specialized crop and dairy farms of varying sizes. Consideration is taken to crop rotation effects, enterprise diversification and machinery and labour cost. The results show that the prospective expected utility benefits attributable to crop rotation, enterprise diversification and access to more advanced technology causing labour and machinery costs reductions are approximately 32–50% for the dairy farms and even higher for the crop farms.
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