Land rental markets

The project seeks to investigate pricing and competition on land rental markets, with an emphasis on local market power. The importance of land for agricultural production, its relevance for agricultural policy, as well as increased public attention with respect to land prices necessitates our understanding of price formation mechanisms on this market. Due to the specific characteristics of land, we propose a spatial-imperfect competition approach, which may yield new, potentially contradictory results relative to classical price theory. We aim to incorporate different features of the land market such as dynamic competition and economies of size, which thus far have not been studied (together). Because a corresponding theoretical model of spatial competition is analytically intractable, we will complement deductive analysis with approaches from computational economics. We plan to simulate the effects of market structure (e.g., via local competition by farms) and price mechanisms (e.g., different types of auctions versus search markets) on land prices and the distribution of profits. The results will contribute to a better understanding of the formation of land prices and their dynamics.

• Georg August University Goettingen, Department of Agricultural Economics and Rural Development, Germany
• Humboldt-Universität Berlin, Department of Agricultural Economics, Germany
• University of Rostock, Chair of Agricultural Economics, Germany
• University of California (UC), Davis, Department of Agricultural and Resource Economics, USA

• DFG (German Research Foundation)