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Local buyers’ exclusion through price on the farmland market: a potential outcome approach

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  • Olivier Beaumais
  • Sauveur Giannoni
  • Caroline Tafani

Abstract

The influx of non-local buyers into the land market is commonly held responsible for the exclusion of local buyers through price. We study the seaside farmland market in Corsica. A massive price gap between non-local and local buyers is observed. To explore this gap, we rely on a treatment effect approach. We first estimate hedonic price models, while controlling for omitted variable bias using an innovative method. We go further and estimate a general potential outcome model which allows capturing observable and unobservable preference heterogeneity between buyers. We find that the price gap indeed reflects preference heterogeneity, suggesting market segmentation at work.

Suggested Citation

  • Olivier Beaumais & Sauveur Giannoni & Caroline Tafani, 2021. "Local buyers’ exclusion through price on the farmland market: a potential outcome approach," Applied Economics, Taylor & Francis Journals, vol. 53(19), pages 2206-2217, April.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:19:p:2206-2217
    DOI: 10.1080/00036846.2020.1856767
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    Cited by:

    1. Lars Isenhardt & Stefan Seifert & Silke Hüttel, 2023. "Tenant Favoritism and Right of First Refusals in Farmland Auctions: Competition and Price Effects," Land Economics, University of Wisconsin Press, vol. 99(2), pages 302-324.
    2. 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.
    3. Stefan Seifert & Silke Hüttel, 2023. "Is there a risk of a winner’s curse in farmland auctions?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(3), pages 1140-1177.

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