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Impact of Farm Size on the Bidding Potential for Agricultural Land

Author

Listed:
  • Duane G. Harris
  • Richard F. Nehring

Abstract

A theoretical model is constructed to determine the maximum bid price that would be made for an acre of land by a decisionmaker with a given set of characteristics, capabilities, and expectations. The variables included that have an impact on the maximum bid price are net income, income variability, wealth, degree of risk aversion, marginal income tax rate, rate of pure time preference, and expected rate of growth in land income and prices. A numerical illustration of the model, developed for cash-grain farmers in Iowa, demonstrates the relative importance of the variables in determining bid-price differentials among farm-size classes.

Suggested Citation

  • Duane G. Harris & Richard F. Nehring, 1976. "Impact of Farm Size on the Bidding Potential for Agricultural Land," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(2), pages 161-169.
    • Handle: RePEc:oup:ajagec:v:58:y:1976:i:2:p:161-169.
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    Citations

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    Cited by:

    1. Tavernier, Edmund M. & Li, Farong & Temel, Tugrul T., 1996. "Search Theory Risk Preference and Farmland Preservation," Agricultural and Resource Economics Review, Cambridge University Press, vol. 25(1), pages 38-45, April.
    2. Robison, Lindon J. & Burghardt, William G., 1983. "Five Principles for Building Present Value Models and their Application to Maximum (Minimum) Bid (Sell) Price Models for Land," Agricultural Economic Report Series 201327, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. Young, Douglas & Lin, William & Pope, Rulon & Robison, Lindon & Selley, Roger, 1979. "Risk Preferences Of Agricultual Producers:Their Measurement And Use," Risk Management in Agriculture: Behavioral, Managerial, and Policy Issues, January 25-26, 1979, San Francisco, California 271459, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.
    4. Pederson, Glenn D., 1982. "A Representative Market Model Of Farmland Bid Prices," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 7(2), pages 1-14, December.
    5. Flowers, Gwendolyn G., 1983. "An economic analysis of the relation of farm land values and returns," ISU General Staff Papers 198301010800009469, Iowa State University, Department of Economics.
    6. Fiske, John Robery, 1983. "The impact of financial constraints on the local price of farm land," ISU General Staff Papers 198301010800008710, Iowa State University, Department of Economics.
    7. Durst, Ron & Compson, Michael, 1992. "Implications of Reduced Capital Gains Taxation for Farmers," WAEA/ WFEA Conference Archive (1929-1995) 321401, Western Agricultural Economics Association.
    8. Young, Douglas L. & Van Kooten, G.C., 1988. "Incorporating Risk Into A Dynamic Programming Application: Flexcropping," Regional Research Projects > 1988: S-180 Annual Meeting, March 20-23, 1988, Savannah, Georgia 272781, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    9. Perera, Jayantha R. & Outlaw, Joe L. & Knutson, Ronald D., 1996. "Minnesota-Wisconsin Milk Price Drives Cheese Price: Some Empirical Evidence," Research Reports 257900, Texas A&M University, Agricultural and Food Policy Center.
    10. Curtiss, Jarmila & Jelínek, Ladislav & Hruška, Martin & Medonos, Tomáš & Vilhelm, Václav, 2013. "The Effect of Heterogeneous Buyers on Agricultural Land Prices: The Case of the Czech Land Market," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 62(2), pages 116-133.
    11. Ureta-Bravo, Boris E. & Helmers, Glenn A., 1981. "Impact Of Selected Federal Tax Provisions On The Growth Of Two Cash-Grain Farms Differing In Size," 1981 Annual Meeting, July 26-29, Clemson, South Carolina 279395, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Temel, Tugrul, 2011. "New facts for old debates: Farm size and productivity in US agriculture," MPRA Paper 31920, University Library of Munich, Germany.
    13. Schnitkey, Gary D. & Taylor, C. Robert, 1987. "Conventional Capital Budgeting Versus Stochastic Dynamic Analysis Of Optimal Farmland Purchase And Sell Decisions," Illinois Agricultural Economics Staff Paper 244662, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
    14. Wozniak, Gregory Dean, 1980. "The adoption decision: a human capital approach," ISU General Staff Papers 198001010800008144, Iowa State University, Department of Economics.
    15. Tyler Freeman & James Nolan & Richard Schoney, 2009. "An Agent‐Based Simulation Model of Structural Change in Canadian Prairie Agriculture, 1960–2000," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(4), pages 537-554, December.
    16. Marti, Carole E. & Dunford, RIchard W., 1982. "The'Role Of Expectations In The Determination Of Vacant Rural Land Prices At The Urban Fringe," 1982 Annual Meeting, August 1-4, Logan, Utah 279171, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Curtiss, Jarmila & Jelínek, Ladislav & Hruška, Martin & Medonos, Tomáš & Vilhelm, Václav, 2013. "The Effect of Heterogeneous Buyers on Agricultural Land Prices: The Case of the Czech Land Market," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 62(2).
    18. Curtiss, Jarmila & Jelínek, Ladislav & Hruška, Martin & Medonos, Tomáš & Vilhelm, Václav, 2013. "The Effect of Heterogeneous Buyers on Agricultural Land Prices: The Case of the Czech Land Market," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 62(02), pages 1-18, May.
    19. Debrecht, Dennis Michael, 1981. "Lending limits and the availability of credit to agricultural borrowers," ISU General Staff Papers 198101010800008411, Iowa State University, Department of Economics.
    20. Moore, Kevin Clare, 1985. "Predictive econometric modeling of the United States farmland market: an empirical test of the rational expectations hypothesis," ISU General Staff Papers 198501010800008872, Iowa State University, Department of Economics.

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