Transactions Costs and New Institutions: Will CBLTs Have a Role in the Saskatchewan Land Market?

Transactions Costs and New Institutions: Will CBLTs Have a Role in the

Saskatchewan Land Market?

Richard Gray

Department of Agricultural Economics, University of Saskatchewan, 51 Campus Drive, Saskatoon SK, S7N 5A8

Increases in farm foreclosures in the last decade have created pressures for individuals and organisations to seek alternatives to the traditional debt financing offarm land. A model of a Comnunity Based Land Trust (CBLT) was developed by Brown, Gray and Molder as an alternative form of land tenure. The transaction cost economics literature suggests that a new institution will be adopted only ifthe institution results in an overall reduction in transaction costs. This paper evaluates the CBLTproposal by comparing the transactions costs with this

form of tenure with the transaction costs ofthe more traditionalform oftenure. The qualitative analysis revealed that no existing form of land tenure clearly dominates the CBLT thus porn a transaction cost perspective, the CBLT may have some probability of acceptance in the marketplace.

INTRODUCTION

I would like to begin by congratulating the organizers of the AIC meeting for choosing the theme, “Who owns the Farm?” Institu- tions of land tenure are key elements in the organization and structure of society. In agrarian civilizations, systems of land tenure play a dominant role in the development. In non agrarian societies, the system of land tenure often reflects the institutions used in the economy as a whole.

Systems of institutions of land tenure evolve in response to changing economic and political conditions. Feudalism served to create a defense system where it was feasible to produce crops in a lawless society. State ownership and collective ownership provided a vehicle to take advantage of economies of scale. In much of the developed world these institutions have been replaced with decen- tralized ownership of land, providing the farmer with better incentives to allocate resources effectively. More recently, in some livestock sectors and in some horticultural production, corporate ownership and opera-

tion and various systems of contracting have grown in importance as institutions that can take advantage of economies of scale. Grain production remains dominated by small units operated by less than three operators.

In Canada, a wide range of land tenure is possible under existing government regulations. Land tenure can take on a wide variety of forms from corporate, cooperative or private ownership with a wide range of possible contracting and tenancy provisions. In this regulatory environment patterns of land tenure will be determined by choice of instrument by individuals in the market place. This paper deals with the choice of a proposed instrument of land tenure called the Community Based Land Trust (Brown, Gray, and Molder, 1993).

In 1937 Ronald Cease proposed that the decision whether to have a transaction occur within a firm or in the market place will be determined by transaction costs (Coase, 1937). He suggested that the form of control (the firm or the market) chosen would tend to be the one with the lowest transaction cost. This early work eventually spawned a great deal of theoretical work known as transaction

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cost economics. This theory suggests, if given a choice, individuals will choose the set of institutions, contracts and transactions that will minimize the (transaction) cost of doing business.

In this paper I attempt to use transaction cost economics to evaluate the potential for the acceptance of the proposed CBLT model as a system of land tenure in Saskatchewan agriculture. This evaluation is qualitative in nature based on largely anecdotal information and therefore should not be viewed as conclusive. The exercise describes a methodology that if quantified could provide an empirical applica- tion of the transaction cost economics.

The paper is organized into fne parts. The frost section provides an introduction to the paper. The paper then provides a brief description of land tenure in Saskatchewan. The third section contains a discussion of transaction cost economics. The subsequent section applies the transaction cost framework to compare the CBLT model to existing forms of the land tenure. The final section summarizes the paper.

LAND TENURE IN SASKATCHEWAN

The recent history of western Canada tells us that land tenure is an institution that can change rapidly with profound consequences. The European land settlement on the prairies occurred over a brief period of history. The need to establish a rail link with British Co- lumbia and the prevent the annexation of the Northwest Territories to the United States soon became part of McDonald’s national policy. This was largely accomplished through a change in property rights for the lands in the territories. “Between 1871 and 1877 Domin- ion representatives signed seven major trea- ties to extinguish Native aboriginal rights in large areas which the Dominion hoped to develop in the immediate future” (Lambrecht, 1991 p.5). The Canadian Pacific Railway com- pany received large tracts of land and financial support from the fledgling government for railway construction. The Dominion Lands Act of 1874 and subsequent amendments that allowed homesteading shaped not only settlement patterns but the type of production and

,

trade that would develop. “In Canada, the Dominion offered a quarter section of land (60 acres) to those who were prepared to live on and cultivate the land during a qualifying period of time,” (Lambmcht, 1991 p.22). The homestead provisions combined with immigration policy brought large numbers of settlers to the region A system of import tari.& created a strong de- mand from settlers to purchase manufactured productsfromthegrowingmanufacturingsector in eastern Canada as the dream of the national policy became a reality. By the late 1920s most of the agricultural area of western Canada had been settled.

In 1930 the federal government turned much of the remaining Crown Land over to the Provinces. The Lands Branch of Saskatch- ewan Agriculture and Food currently leases 6.3 million acres or about 10% of the agricultural land base to private citizens for agricultural use. Most of this land is leased for grazing purposes only. The lessee is restricted from the cultivation of these lands by the terms of the lease. Approximately 1 million acres of this land was purchased from the private sector in the early 1970s by the Saskatchewan Land Bank program which it leases to eligible tenants with lifetime leases.

Ninety percent of the agricultuml land in Saskatchewan is privately owned with the government retaining some control over access, use and sale of the land. Government has retained the right to expropriate land for their use. Local governments have the right to zone the use of the land and the Farm Ownership Act restricts the non-resident ownership of Saskatchewan Farm Land. The sale and mortgaging of land is regu- lated by an extensive set of regulations. When the NDP government was elected in 1991 it introduced the six year lease program that required the mortgage holder to give the previous owner the first right or refusal to lease the fore- closed upon land for a period of up to six years. Some small concessions were given to financial institUtiOnS.

Despite the range of government programs and regulations, most land uses are not governed by regulation, rather they are governed by the choice of contracts between private and individuals. The government role is limited gener-

ANNUAL MEETING PROCEEDINGS 503

ally to regulation to enhance the enforcement of contacts. This has allowed a variety of private contacts or institutions to govern the use of land. If we consider land tenure, several distinct institutions have evolved within the private sector, each time being complemented by government regulations that facilitate the enforcement of contracts. Understanding the de- mand for regulation and the process whereby new regulations are formed are perhaps the most interesting and important areas in transaction cost economics.

The Current Situation In the 1980s low grain prices combined with high interest costs resulted in many farm land mortgage holders no longer able to service their debt from market returns. The governments responded to the debt and income crisis with a massive expenditure on farm income support, including FSAM I, FSAM2, and GRIP. This was supplemented by interest rate reduction pro- gmms, cash advance programs, and the $25 per acre operating loan program. By 199 1 it was clear that a financial squeeze still e‘xisted for many producers but the debt and fiscal situation of the province of Saskatchewan had nearly reached the point of insolvency. The provincial government no longer had the money to finan- cially support producers in the process of foreclosure so rather than providing a massive income subsidy they introduced the “six year lease back program” which provides producers unable to make mortgage commitments the op- portunity to rent the land for a six year period after it was surrendered to the financial institution At the end of the six year period the former owners are given the first right of refusal on the sale of the farm land.

The private sector also responded to the land tenure debt crisis. Individuals modified the form of tenure in a variety of ways. Some farmers rented greater proportion on their land while others sold assets to reduce the financing costs. There were also efforts to develop alternatives to the private/mortgage form of ownership. Many equity financing schemes were proposed. These proposals allowed financial risk to be shared with equity holders in the farm.

One of the more recent proposals developed was the Community Based Land Trust (CBLT). The CBLT model was developed by Brown, Gray, and Molder as a research project at the University of Saskatchewan The project was sponsored and directed by three major coopem- tive organ&ions (the Saskatchewan Wheat Pool, Credit Union Central of Saskatchewan and Federated Cooperatives Ltd.) and the Inter- ChumhCommitteeonAgriculture.Thereseamh theoretically developed a new institution for land holding and sought input from existing producers and financial institutions.

Land is placed in the land trust and is rented to tenants with lifetime leases with annual rent equal to one third the market price of wheat multiplied by the long term soil rated yield. The individual placing land into the trust receives shares that reflect the long term soil rated yield on the land. Each share entitles the holder to a share of the rental revenue of the trust. The shares can only be sold privately. Regardless of the ownership of shares, proposed Board of Directors is made up of l/3 tenants, l/3 community shareholders and 113 non resident share holders ensuring esisting community input into day to day decisions.

Given the e.xtensive consultation and input to date Brown, Gray, and Molder have suggested that the model can only be further tested with the establishment of pilot projects. To establish a pilot CBLT within the existing legal framework would require significant one time legal costs ($50,000 - $150,000). Once the legal instrument for the first CBLT was developed, it could be used for subsequent CBLTs at a much lower cost. If the government has a role in providing the resources for the startup legal costs, a legiti- mate question for policy makers to ask is whether the CBLT model has a high enough probability of becoming a useful institution to warrant the money required to test this concept in the market place. The remainder of this paper attempts to examine the probability of CBLT succeeding as a form of land tenure.

TRANSACTION COST ECONOMICS

In the seminal article “The Nature of the Firm”, Coase (1937) posed a basic question.


Why are some transactions done within the confines of a firm while others are done in the market place? In theory, each member of an assembly line could buy the product from the line i.e. add a wheel and sell it to the next person in the assembly line. Why then do we use an organization of a firm for some transactions whereas as the market place is used between a canola crusher and a farmer? Coase argued that the ownership of common assets was the role of the firm. A firm would exist as long as the economies of scale achieved of the firm was more that sticient to offset the transaction costs associated with common ownership. He argued the organization that would evolve would be one that would minimize the total of production and transaction costs.

Although Coase used a dichotomy between the firm and the market to describe his idea this distinction tends to be an artificial. Cheung (1983) had a similar notion for the definition of a firm. He suggested that the firm applies to all non-caveat exemptor transactions ‘. However, this is very broad definition of the firm. Almost all transactions are non-caveat exemptor. If they weren’t, goods would require a lot of inspection before purchase. Most items purchased are returnable. These transactions are therefore part of the firm by Cheung’s definition. Barzel (1989) points out that property rights are almost never fully defined. Each asset has many attributes and each of these attributes needs to be addressed in a contract for the contract to be complete. When a contract is not complete then the undefined attributes become common property that have to be contested. This requires a form of organization to deal with these issues of common pmp- erty (such a a firm). Rather than drawing a clear distinction between the firm and the market place it may be more useful to think of organi- zations or institutions as the collections of con- tiacts that govern the operations of multiple resource owners. The set of coordinated contacts that makes up the whole organization is referred to as “the nexus of contracts” (Alchian and Dernsetz 1972).

According to Coase, a contract that offers the lowest transaction costs will tend to be

used the most to govern a set of actions. How- ever, as Libecap ( 1991) points out, having lower transaction cost is a necessary rather than a sufficient condition for adoption. A new set of contracts establishes a new set of pmp- erty rights. If both parties affected by the change in the contracts do not benefit, the losers will block changes. An obvious case in in a bilateral contract, the parties will not arrive at a new contract unless both parties are willing to agree to the new terms. An im- proved set of contracts may lower transaction costs. This creates more rent for the parties to share. However, unless all interested parties share in the increase in rents the losers will block change. Put in welfare terms, unless the change results in aPareto Improvement, it will be opposed.

Transactions cost or the cost of exchange will be determined by the type of contract or organization (sets of contracts) that govern the transaction. In turn transaction costs will in- fluence which set of contracts are chosen It is therefore appropriate to examine transaction costs when evaluating the potential of a new institution to compete with existing institutions

Transactions costs are very difficult to pre- cisely define. A basic premise of economics is that individuals choose from the options they have available to them to maximize their util- ity2. Williamson (1973) makes the point that it is this opportunistic behavior when combined with incomplete contracts that leads to transaction costs. Uncertainty about the future makes contracts that deal with all future con- tingencies difficult if not impossible to spec- ify. In addition uncertainty not only creates financial risk for economic agents, it often makes it impossible to draw a direct relation- ship between the actions of an individual and the consequences of those actions. With uncertainty information is a key element in evaluating and providing incentives for economic behavior. Thus information economics and transaction cost economics are related bodies of literature. A sub topic of both of these areas isprinciple-agentproblem. A principle agent problem is created when an individual (or fnm) tries to achieve some action of


another individual. the agent, through the use of a contract”. This literature has identified some of the transaction costs of doing business.

Some of the important elements of transaction costs include:

I. The Cost of Negotiating a Contract Exchange is often modeled as a costless activity. The cost of negotiating a contract deals with the cost of collecting relevant information and negotiating the terms of an agreement. Both the frequency of negotiation and the cost of negotiation have to be included in the calculation of the annual costs. If the contract requires subsequent renegotiation, such as when foreclosure occurs, these costs (multiplied by the appropriate probability) are also a part of negotiating the contract.

2. Opportunistic Behavior of the Agents (I’Moral Hazard)

When an agent is involved in the production decision the contract may create an incentive to maximize something other than the net rent from production. As long as the agent is not the residual claimant for her actions the agent will tend to maximize her utility at a cost to the overall efficiency of the action. In insurance this is referred to as moral hazard. In labour related principle agent problems this is often referred to as shirking. In the crop share literature, the agent may only receive 2/3 of the value-of-marginal-product of more effort and will act accordingly. The resulting loss in efficiency is a cost of transacting in this rnan- ner.

3. Monitoring and Enforcement Costs

If an agent is not a residual claimant it will often be in an agents interest to break the contract. For instance, in an employment contract an agent may have an incentive to take a long coffee break, or in agriculture the agent may not have sufficient incentive to maintain rented equipment or to control weeds on a rented field even though these are specified requirements of the contract. The principle has to expend some effort to determine whether

the agent is adhering to the terms of the contract. Thus monitoring activity such as hiring a foreman or visiting the farm regularly requires resources that are part of the cost of the transaction.

4. Signaling Costs Often a principle will have contract provisions that will reward specific behavior of the agent if this is observed behavior is correlated with the desired behavior of the agent. For instance, if an employee reports after hours for work this may be correlated with more effort during the day. Cmating a positive signal may require resources in excess of the optimal resource use. An example in agriculture would be the tenant that uses an excessive amount of fertilizer so that the landlord will be more likely to allow renewal of the contract. The cost of providing this positive signal is referred to as signaling cost.

5. Risk Averse Behavior

The theory of the behavior under risk and uncertainty is well developed. Sandmo ( 197 1) showed that a risk averse individuals without complete insurance may use inputs at sub-optimal leve14. The resulting loss in efficiency due to risk averse actions are part of transaction costs.

6. Reduced Investment Due to Tenure Insecurity

A related set of costs is the reduced incentive to invest in capital assets specific to the contract. For example, if a producer is unsure that they will be able to farm the land two years hence, then they will be reluctant to invest in the optimal stock of machinery required to operate the land. The resulting inefficiency is a transaction cost resulting from insecure tenure.

7. Restricted Economies of Size

The form of tenure may place limits on farm size. Capital is often effectively rationed to individuals at a point in time. This may restrict the amount of capital and the size of operation


of a farm. Many studies have shown some economies of size in grain production. If a particular form of tenure restricts farm size, and this results in a loss in efficiency this should be included as a transaction cost.

Each set of contracts that makes up a system of land tenure will incur most if not all of the transaction costs outlined above. For instance, share crop arrangement will take time to negoti- ate, will create some moral hazard will require some monitoring costs and some signaling costs, will expose the agent to some risk and will place an upper limit on the size of operation. Even given these transaction costs, this contract may have lower costs than other forms of tenure. According to the transactioncost framework, the set of contracts with the lowest total transaction costs will tend to displace those with higher costs.

EVALUATION OF THE CBLT MODEL

The CBLT model represents a departure from existing forms of land tenure. The question of whether this model has a potential is useful to consider. Further development of the CBLT

model will require public funds to develop an initial prospectus for this new institution and to put the legal framework in place. If the CBLT offers no advantage in terms of transaction costs it is unlikely to be adopted and therefore does not warrant further development. On the other hand if the model does show a potential to reduce transaction cost developing the public good aspects of the legal framework for its existence may be warranted from a public perspective.

The CBLT model will be evaluated against existing forms of land tenure from a transaction cost framework to asses its viability. Five tenure relationships will be compared: Owner- operator, Mortgaged Owner-operator, Crop share rental, Cash rental, Corporate model, and the CBLT model. The crop share rental model is where the land is rented on a l/3 crop sham. The cash rent is an annual cash rent The corporate model is where a corporation owns the land and hires a manager to operate the farm. The final option is the Community Based Land Trust model. The qualitative assessment described be- low are summarized in Table 1.

Table 1. Transaction cost with alternative forms of land tenure

Type of contract

Owner- owmr- Crop share Cash operator operator rental rental

mortgaged

Transaction cost

cost of 0 + + + negotiating a contract

Opportunistic 0 + + 0 behavior

Monitoring/ 0 + + 0 enforcement costs

Signalling 0 + + + costs

Risk averse + + + + behavior

Restricted + + + + economies of size

Corporate CBLT model model

+ +

+ +

+ +

+ +

0 +

0 +


The Self-financed Owner-operator The dominant form of land tenure in Saskatch- ewan is often referred to as “owner-operator” or sole proprietorship. In this form of tenure the operator of the farm has title to the land. Many of the farm operators have no debt and thus have clear title to the land they operate. This form of tenure eliminates many of the transaction costs by eliminating the principle-agent problem. The operator is the residual claimant to all income generated from the land and thus has the incentive to maximize the rent generated from the land. This eliminates moral hazard monitoring costs and signaling costs. The contract is negotiated only when the land is purchased or sold and thus is very small. With these savings in transaction cost it is clear why this form of tenure has had a dominant role in the market place. The large transaction cost that can be associated with this form of tenure is the lack of economies of size. A typical 1500 acre farm requires about $500,000 worth of capital. A 3000 acre farm, which one principle operator could farm, requires about a million dollars. Given these large capital requirements a farmer wishing to capture some economies of size is forced to utilise other forms of land tenure.

The Mortgaged Owner Operator In this form of ownership, which is the second most common form in Saskatchewan, the owner operator borrows money to purchase land. The loan is typically secured with a mortgage against the title of the land. Like the unmortgaged owner operator, the owner of the land is the residual claimant to land as long as the operator remains solvent. Under these conditions the operator has the incentive to maximize the economic return from the land. In addition, the borrowed capital makes larger more efficient farm size feasible. lf the owner operator becomes insolvent the costs can be very large. When there is a significant risk of insolvency the transactions costs escalate con- siderably. The producer will practice moral hazard to the extent that short run profits become more important than long run profits. Risk averse behavior may be required for sur- vival. There will also be an incentive for the producer to misrepresent his financial situ-

ation resulting in increased negotiating and enforcement costs for the financial institution. In the event of insolvency the cost increases even further with large legal, economic and social costs.

Crop Share Rental Approximately 40% of the land in Saskatche- wan is leased, a large proportion of the leases with a crop share rental agreement. Typically the tenant provides the landlord with l/4 or l/3 of the crop produced as rental payment. This form of lease reduced financial risk to the tenant by having payment obligations that are propor- tional to gross income and correlated with net income. These leases are often renewed on a one to five year basis, The major disadvantage of this approach is the adverse incentives that are created because the tenant of the farm operator is no longer the residual claimant to the crop produced. Ifa tenant were not monitored the tenant would apply fertilizer to the point where the last dollar invested created $1.5 in total gross income. These adverse incentives create moral hazard, monitoring and signahng costs. Addi- tional incentive losses are created with the potential to misrepresent crop production if not carefully monitored. The large requirements for monitoring costs has meant that this form of tenure e,xists between members of the same family or of the same community where the cost of monitoring is low.

Cash Rental Another form of lease that is common, is the cash rental agreement. In this form of rental agreement the tenant agrees to rent the land for an agreed upon amount each year of the contract. These contracts leave the tenant as the residual claimant to the land as such removes the incentive problems created in the crop share agreement. This reduces the need for monitoring and enforcement costs. This form of agreement has to be negotiated more often as the terms of the agreement have to vary with market conditions. Secondly, the tenant car- ries more risk than with the crop share agreement and thus may act in a more risk averse way. Finally, because a bidding process is often used to find the appropriate cash rent for


each year, the tenant has very little security of tenure and therefore will not make the appropriate long term investment in either land con- servation or in machinery investment.

The Corporate Model Land tenure can also exist where a corporation owns assets and hires management and em- ployees to run the business. While pervasive in many forms of industry, this form of ownership is rare in agriculture, particularly in grain production. For this reason it is useful to examine the transaction costs and speculate about which costs make this form of organization prohibitively expensive from a transaction cost perspective. Clearly the advantage of this form of ownership is the ability to amass large amounts of capital. These corporations should have very low tmnsactions costs when it comes to economies of size, risk averse behavior and investment under uncertainty. The most cited transaction cost for this form of ownership is the lack of incentives for managers, and the extreme costs of management and enforcement. The effect of weather makes bad management difIicuIt to separate from bad luck. This is especially true for machinery operation where maintenance and constant surveillance is required for efficient operation.

The CBLT Model In the CBLT model as proposed by Brown, Molder and Gray, farm land is placed into the land trust and is rented to tenants with life time leases with annual rent equal to one third the market price for wheat multiplied by the long term soil rated yield. From the tenants perp- sective the rent paid for a given year is not a function her decisions and as such the tenant become the residual claimant to the land. This reduces the need to monitor crop inputs. Be- cause the tenant has a lifetime lease the tenant will have incentive to manage the soil from a long term perspective again reducing the need for monitoring. Finally, by having the CBLT with a community control, the monitoring costs may be low. The lifetime lease should also serve to increase the security of tenure consistent with optimal machinery investment.

The major transaction cost in this form of tenure will be the transaction cost associated with establishing and running the CBLT. If this cost is large enough it could easily make the transaction cost of the institution higher than the costs for any other of the existing institutions. Brown, Molder and Gray indicate that the operational costs of the CBLT should be very modest if at least eighty quarters of land axe in a CBLT. The cost of establishing CBLT is very uncertain at this point. A com- mittee study is currently examining the cost of legal work for establishing a CBLT. All indi- cations are that the cost of the first CBLT would be large given that this is a new institution. After the legal framework has been established the cost should drop to modest levels.

The Participation Constraint

The other consideration which is not directly part of the transaction cost framework is the participation constraint. For a contract to be established between a principle and an agent the contract must offer terms that are at least as good as any alternative the principle or agent has available. While it is clear that many tenants would prefer a CBLT lease over other forms of tenure, it is less clear that land owners would prefer these contracts. If, for example, a landlord lives in community and has low monitoring costs a crop share agreement may be preferable to the CBLT. Brown, Gray and Molder outline several situations where they feel the CBLT would be a preferred option by landlords. To some extent this was confirmed in the focus groups. A similar set of issues surrounds the value of CBLT shares as financial instruments. To some extent neither of these issues can be resolved without testing them in the market place.

SUMMARY

In Saskatchewan we observe many different forms of land tenure. Each form of land tenure has a different set of transaction costs. Given the costs and the constraints faced by each individual they choose the form of land tenure.


Those institutions with the lowest transaction costs will tend to be chosen more often.

Community Based Land Trust proposal is an alternative set of contracts or institutions designed in consultation with the producers to address some of the weaknesses of existing institutions. An anecdotal and qualitative analysis of tmnsaction costs summarized in Table 1 suggests that this form of land tenure is not clearly dominated by any of the existing forms of land tenure nor does the CBLT domi- nate any of the existing forms. This would suggest the CBLT may have the potential for a limited role in the market place. The only conclusive test of this hypothesis would be to provide the legal framework for the existence of the CBLT and see whether or not is is adopted in the market place.

NOTES ‘A caveat exemptor transaction (as I understand it) is a legal term to describe simple transaction where money or some other asset is offered in exchange for a good and after the transaction the seller has no remaining obligations or liabilities to the buyer. ‘This does not rule out the possibility that an individual can derive utility from the utility of another individual. 3This is a subset of possible contracts because bilateral actions are required and often more than two parties are involved.

?his may be significant because the is rarely complete insurance because of the potential of moral hazard, monitoring and signaling costs that such a contact would require.

REFERENCES Alchian, A.A. and Demsetz, H. 1972. Production, information costs, and economic organisation. American Economic Review 621777-795 Barzel, Yoram. 1989. Contractitlg for Property Rights, (Political Economy of Institutions and De- cisions). Cambridge: Cambridge University Press. Brown, W. J., Gray, R. S., and P.J. Molder. 1993. A Community Based Land Trust for Sas- katchewan Agriculture. Saskatoon: Department of Agricultural Economics. Cheung, S. N. 1983. The contractual nature of the fml. Jomlal of Law and Eco?lomics 26: 1-2 1. Coase, R. 1937. The Nature of the Firm. Ecorlomica 41386-405. Libecap, Gary. 1990. Contractinl: for Proper& Rights. Cambridge University Press: Cambridge. Lambrecht, K L. 1991. The Administration of Dominion Lands 1870-l 930. Regina: The Cana- dian Plains Research Center, University of Re- gina. Sandmo, A. 1971. On the Theory of the Competi- tive Firm Under Price Uncertainty. Amekan Eco- nomic Review 6 1:65-73. Williamson, 0. E. 1973. Markets and hierarchies: some elementary considerations. American Eco- nomic Review 63: 3 16-25.

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Transactions Costs and New Institutions: Will CBLTs Have a Role in the Saskatchewan Land Market?