Journal Article Risk Sharing, Sharecropping and Uncertain Labour Markets Get access David M. G. Newbery David M. G. Newbery Churchill College, Cambridge, and Stanford University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 44, Issue 3, October 1977, Pages 585–594, https://doi.org/10.2307/2296910 Published: 01 October 1977 Article history Received: 01 May 1974 Accepted: 01 December 1976 Published: 01 October 1977

The paper shows that between two competitive but risky economies with no insurance markets, free trade may be Pareto inferior to no trade. The model is simple enough to show clearly the role prices play in transferring and sharing risk when there is an incomplete set of markets, but rich enough to exhibit the resulting inefficiencies dramatically.