(DP 2003-02) Comprehensive Agrarian Reform Program and the Coase Theorem
The prohibition of the sale or usufruct of land under the Comprehensive Agrarian Reform Law has, in effect, destroyed the legal land market and, in its wake, the legal rural credit market. These markets have gone underground resulting in very high transaction cost and bankruptcy to farmers. Section 27 of CARL contravenes a beautiful results in Economics called the Coase Theorem. Reforms suggested are analyzed in the light of this theorem.
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