Rental and sale prices of agricultural lands under spatial competition

Arbeitspapier

Much of the land economics literature has largely ignored the spatial nature of competition and related differences between farmland rental and sales markets. In this note we propose a model for price formation in both markets under a spatial competition framework. We demonstrate that price formation differs, particularly under policy-induced output price shocks. We suggest that using rent-price ratio as an approximation for expectations in the net returns of farming, based on the net present value model, may produce biased results. We conclude that estimates for the capitalization of agricultural, environmental and energy policy into farmland prices can be biased.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: FORLand-Working Paper ; No. 29 (2024)

Classification and Topics

• Classification: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets ; Agricultural Policy; Food Policy
• Subject: Land Markets ; Rent-price Ratio ; Spatial Competition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Graubner, Marten ; Hüttel, Silke
• Event: Veröffentlichung
• (who): Humboldt-Universität zu Berlin, DFG Research Unit 2569 FORLand "Agricultural Land Markets - Efficiency and Regulation"
• (where): Berlin
• (when): 2024

Further information

• DOI: doi:10.18452/28472
• URN: urn:nbn:de:kobv:11-110-18452/29097-1
• Last update: 10.03.2025, 11:45 AM CET