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Farmland values and bidder behavior in first-price land auctions

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  • Odening, Martin
  • Huettel, Silke
  • Croonenbroeck, Carsten

Abstract

Within this paper, we aim to investigate asymmetries among bidders in land auctions that may entail non-competitive prices. 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 nonparametric techniques, we cannot find evidence for asymmetric bidder structures while differentiating between legal entities, tenancy status, and nationality of bidders. Our findings challenge the hypothesis that land privatization via auctions discriminates against certain buyer groups—an argument that is often used to justify stricter regulation of agricultural land markets.
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  • Odening, Martin & Huettel, Silke & Croonenbroeck, Carsten, 2018. "Farmland values and bidder behavior in first-price land auctions," 2018 Annual Meeting, August 5-7, Washington, D.C. 274114, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea18:274114
    DOI: 10.22004/ag.econ.274114
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    1. Carsten Croonenbroeck & Martin Odening & Silke Hüttel, 2020. "Farmland values and bidder behaviour in first-price land auctions [Identification of standard auction models]," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 47(2), pages 558-590.
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    3. Huettel, Silke & Odening, Martin & Kataria, Karin & Balmann, Alfons, 2013. "Price Formation on Land Market Auctions in East Germany – An Empirical Analysis," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 62(02), pages 1-17, May.
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    16. Tietz, Andreas & Forstner, Bernhard & Weingarten, Peter, 2013. "Non-Agricultural and Supra-Regional Investors on the German Agricultural Land Market: An Empirical Analysis of their Significance and Impacts," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 62(2).
    17. Hickman Brent R. & Hubbard Timothy P. & Sağlam Yiğit, 2012. "Structural Econometric Methods in Auctions: A Guide to the Literature," Journal of Econometric Methods, De Gruyter, vol. 1(1), pages 67-106, August.
    18. Curtiss, Jarmila & Jelínek, Ladislav & Hruška, Martin & Medonos, Tomáš & Vilhelm, Václav, 2013. "The Effect of Heterogeneous Buyers on Agricultural Land Prices: The Case of the Czech Land Market," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 62(2).
    19. Tietz, Andreas & Forstner, Bernhard & Weingarten, Peter, 2013. "Non-Agricultural and Supra-Regional Investors on the German Agricultural Land Market: An Empirical Analysis of their Significance and Impacts," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 62(02), pages 1-13, May.
    20. Fluck, Zsuzsanna & John, Kose & Ravid, S. Abraham, 2007. "Privatization as an agency problem: Auctions versus private negotiations," Journal of Banking & Finance, Elsevier, vol. 31(9), pages 2730-2750, September.
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    22. Štefan Bojnec & Imre Fertő, 2013. "Farm income sources, farm size and farm technical efficiency in Slovenia," Post-Communist Economies, Taylor & Francis Journals, vol. 25(3), pages 343-356, September.
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    Cited by:

    1. von Hobe, Cord-Friedrich & Mußhoff, Oliver, 2020. "On the effectiveness of restricted tenders as a form of policy intervention on agricultural land markets," 60th Annual Conference, Halle/ Saale, Germany, September 23-25, 2020 305592, German Association of Agricultural Economists (GEWISOLA).
    2. Carsten Croonenbroeck & Martin Odening & Silke Hüttel, 2020. "Farmland values and bidder behaviour in first-price land auctions [Identification of standard auction models]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(2), pages 558-590.
    3. Ritter, Matthias & Huttel, Silke & Odening, Martin & Seifert, Stefan, 2019. "Revisiting The Relationship Between Land Price And Parcel Size," 2019 Conference (63rd), February 12-15, 2019, Melbourne, Australia 285062, Australian Agricultural and Resource Economics Society (AARES).
    4. Marlene Kionka & Martin Odening & Jana Plogmann & Matthias Ritter, 2021. "Measuring liquidity in agricultural land markets," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 82(4), pages 690-713, September.
    5. von Hobe, Cord-Friedrich & Musshoff, Oliver, 2021. "On the effectiveness of restricted tendering as a form of policy intervention on agricultural land markets," Land Use Policy, Elsevier, vol. 103(C).
    6. Kionka, Marlene & Kuethe, Todd H. & Musshoff, Oliver & Odening, Martin & Ritter, Matthias, 2022. "Bargaining Power in the Agricultural Land Rental Market," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322186, Agricultural and Applied Economics Association.
    7. Plogmann, Jana & Mußhoff, Oliver & Odening, Martin & Ritter, Matthias, 2020. "What Moves the German Land Market? A Decomposition of the Land Rent-Price Ratio," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 69(1).
    8. Deininger, Klaus W. & Ali, Daniel Ayalew & Neyter, Roman, 2023. "Impacts of a mandatory shift to decentralized online auctions on revenue from public land leases in Ukraine," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 432-450.
    9. Plogmann, Jana & Mußhoff, Oliver & Odening, Martin & Ritter, Matthias, 2022. "Farmland sales under returns and price uncertainty," Economic Modelling, Elsevier, vol. 117(C).
    10. von Hobe, Cord-Friedrich & Mußhoff, Oliver, 2020. "On the effectiveness of restricted tenders as a form of policy intervention on agricultural land markets," 60th Annual Conference, Halle/ Saale, Germany, September 23-25, 2020 305592, German Association of Agricultural Economists (GEWISOLA).
    11. Isenhardt, Lars & Seifert, Stefan & Hüttel, Silke, 2021. "On the price effect of a right of first refusal in farmland auctions," 61st Annual Conference, Berlin, Germany, September 22-24, 2021 317062, German Association of Agricultural Economists (GEWISOLA).
    12. Myrna, Olena, 2023. "Competition in online land lease auctions in Ukraine: Reduced-form estimation," Land Use Policy, Elsevier, vol. 125(C).
    13. 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.
    14. 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.
    15. 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.
    16. Cord-Friedrich von Hobe & Marius Michels & Oliver Musshoff, 2021. "German Farmers’ Perspectives on Price Drivers in Agricultural Land Rental Markets—A Combination of a Systematic Literature Review and Survey Results," Land, MDPI, vol. 10(2), pages 1-22, February.

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    More about this item

    Keywords

    Ag Finance and Farm Management; Research Methods/Econometrics/Stats; Demand and Price Analysis;
    All these keywords.

    JEL classification:

    • C57 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Econometrics of Games and Auctions
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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