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Can land market regulations fulfill their promises?

Author

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  • Heinrich, Florian
  • Appel, Franziska
  • Balmann, Alfons

Abstract

After land prices in Germany increased continuously since 2006, policy makers, representatives of farmers' unions, NGOs, and farmers started and continued to discuss or propose new land market regulations to stop price increases and to protect particularly smaller farmers. In this paper we analyze different types of regulations for the land rental market with the agent-based model AgriPoliS. Our simulation results show that price and farm size limitations may inhibit rental price increases and reduce structural change. The regulations do however not lead to a conservation in the number of small farms; neither do they have a substantial positive impact on their profitability and competitiveness. Many small farms still exit agricultural production and only few are able to grow into a larger size class. Beyond redistributional costs, e.g. beared by landowners, economic and social costs result from reduced average economic land rents, less regional value-added and less employment caused by a reduced functionality of the land market and biased incentives.

Suggested Citation

  • Heinrich, Florian & Appel, Franziska & Balmann, Alfons, 2019. "Can land market regulations fulfill their promises?," FORLand Working Papers 12 (2019), Humboldt University Berlin, DFG Research Unit 2569 FORLand "Agricultural Land Markets – Efficiency and Regulation".
    • Handle: RePEc:zbw:forlwp:122019
    DOI: 10.18452/20890
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    References listed on IDEAS

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    Cited by:

    1. Johanna Jauernig & Stephan Brosig & Silke Hüttel, 2023. "Profession and residency matter: Farmers' preferences for farmland price regulation in Germany," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(3), pages 816-834, September.
    2. Heinrich, Florian & Appel, Franziska & Balmann, Alfons, 2019. "Can land market regulations fulfill their promises?," EconStor Preprints 208388, ZBW - Leibniz Information Centre for Economics.
    3. Balmann, Alfons, 2020. "Agrarstrukturgesetzentwurf Sachsen-Anhalt: Faktencheck und Einordnung," FORLand Project Publications 308576, University of Natural Resources and Applied Life Sciences, Vienna, Department of Economics and Social Sciences.

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    More about this item

    Keywords

    structural change; land market; land market regulation; agent-based modeling;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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