Farmland values and bidder behaviour in first-price land auctions. (13th May 2019)

• Record Type: Journal Article
• Authors: Croonenbroeck, Carsten; Odening, Martin; Hüttel, Silke
• Is Part Of: European review of agricultural economics. Volume 47:Number 2(2020)
• Page Start: 558
• Page End: 590
• Publication Date: 2019-05-13
• Subjects: first-price sealed bid land auctions -- structural estimation -- buyer heterogeneity; Agriculture -- Economic aspects -- Periodicals; Agriculture -- Economic aspects -- Europe -- Periodicals; 338.109405
• DOI: 10.1093/erae/jbz025
• Languages: English
• ISSNs: 0165-1587

Abstract

Abstract: We investigate potential asymmetries among bidders in land auctions that may entail market inefficiencies. Using representative data for eastern Germany including winning bids, bidder characteristics and land amenities, we pursue a structural approach to derive distributions of latent land values for different bidder groups. By applying non-parametric techniques, we cannot find evidence for distinct asymmetries while differentiating between legal entities, tenancy status and nationality of bidders. Our findings challenge the hypothesis that land privatisation via auctions discriminates against certain buyer groups – an argument that is often used to justify stricter regulation of agricultural land markets.