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Price Formation in Farm Land Markets

Author

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  • David A. King
  • J. A. Sinden

Abstract

Four models of price formation, incorporating search and bargaining concepts, were specified for an Australian farm land market. The models were estimated using primary data obtained from land buyers. A sequential, four-equation model of buyer/seller behavior was selected as conceptually superior. Substantively, final prices were closer to buyers' bid prices than sellers' offer prices; buyers valued soil conservation and proximity to town more highly, and property productivity and size less highly, than the sellers; and market information had a positive influence on price. In this area, education may be preferable to subsidies for achieving soil conservation.

Suggested Citation

  • David A. King & J. A. Sinden, 1994. "Price Formation in Farm Land Markets," Land Economics, University of Wisconsin Press, vol. 70(1), pages 38-52.
    • Handle: RePEc:uwp:landec:v:70:y:1994:i:1:p:38-52
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    Citations

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    Cited by:

    1. Pavel Ciaian & d’Artis Kancs & Johan Swinnen, 2010. "EU Land Markets and the Common Agricultural Policy," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 53(3), pages 1-31.
    2. Natividad Guadalajar Olmeda & Mª L.Fenollos Ribera & Fco. Javier Rib Sanchis, 2001. "The farmland market in Spain. Econometric models for the estimation of the market value," ERES eres2001_174, European Real Estate Society (ERES).
    3. Angelovska, Neda Petroska & Ackovska, Marija & Bojnec, Štefan, 2012. "Agricultural Land Markets and Land Leasing in the Former Yugoslav Republic of Macedonia," Factor Markets Working Papers 113, Centre for European Policy Studies.
    4. Ciaian, Pavel & Kancs, d'Artis & Swinnen, Johan F.M. & Van Herck, Kristine & Vranken, Liesbet, 2012. "Sales Market Regulations for Agricultural Land in EU Member States and Candidate Countries," Working papers 120249, Factor Markets, Centre for European Policy Studies.
    5. Bojnec, Stefan, 2011. "Land Markets in the Three Candidate Countries of the EU," Working papers 117482, Factor Markets, Centre for European Policy Studies.
    6. Darrell L. Hueth, 1995. "The Use of Subsidies to Achieve Efficient Resource Allocation in Upland Watersheds," IDB Publications (Working Papers) 39158, Inter-American Development Bank.
    7. Silke Hüttel & Simon Jetzinger & Martin Odening, 2014. "Forced Sales and Farmland Prices," Land Economics, University of Wisconsin Press, vol. 90(3), pages 395-410.
    8. Mara Balestrieri & Amedeo Ganciu, 2018. "Landscape Changes in Rural Areas: A Focus on Sardinian Territory," Sustainability, MDPI, vol. 10(1), pages 1-16, January.
    9. Maximilian Humpesch & Stefan Seifert & Alfons Balmann & Silke Hüttel, 2022. "How does tenancy affect farmland prices? Effects of lease status, lease term and buyer type," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 83(2), pages 242-263, September.
    10. Stefan Seifert & Christoph Kahle & Silke Hüttel, 2021. "Price Dispersion in Farmland Markets: What Is the Role of Asymmetric Information?," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1545-1568, August.
    11. Di Corato, Luca & Brady, Mark V., 2019. "Passive farming and land development: A real options approach," Land Use Policy, Elsevier, vol. 80(C), pages 32-46.
    12. Adam Arsenault & James Nolan & Richard Schoney & Donald Gilchrist, 2012. "Outstanding in the Field: Evaluating Auction Markets for Farmland Using Multi-Agent Simulation," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 15(1), pages 1-11.
    13. Qineti, Artan & Rajcaniova, Miroslava & Braha, Kushtrim & Ciaian, Pavel & Demaj, Jona, 2014. "Land Market Imperfections And Reform Rigidities: A Case Study From Rural Albania," 142nd Seminar, May 29-30, 2014, Budapest, Hungary 169088, European Association of Agricultural Economists.
    14. Hueth, Darrell L., 1995. "The Use of Subsidies to Achieve Efficient Resource Allocation in Upland Watersheds," IDB Publications (Working Papers) 6301, Inter-American Development Bank.
    15. Cotteleer, Geerte & Gardebroek, Cornelis, 2006. "Bargaining and market power in a GIS-based hedonic pricing model of the agricultural land market," 2006 Annual meeting, July 23-26, Long Beach, CA 21255, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Lisi, Gaetano & Iacobini, Mauro, 2012. "Estimation of a Hedonic House Price Model with Bargaining: Evidence from the Italian Housing Market," MPRA Paper 66474, University Library of Munich, Germany.
    17. Kuethe, Todd H. & Bigelow, Daniel P., 2018. "Bargaining Power in Farmland Rental Markets," 2018 Annual Meeting, August 5-7, Washington, D.C. 274113, Agricultural and Applied Economics Association.
    18. Sauveur Giannoni & Olivier Beaumais & Caroline Tafani, 2019. "Price gap between non-local and local buyers on the farmland market: a potential outcome approach," Working Papers hal-02400305, HAL.
    19. Sinden, Jack A., 2003. "Influence of Conservation of Native Vegetation on Land Values in Moree Plains Shire, NSW," Working Papers 12903, University of New England, School of Economics.

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