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Farm exits and competition on the land market: Evidence from spatially explicit data

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  • Pennerstorfer, Dieter

Abstract

In this article, we analyze competition for agricultural land as an important, scarce and immobile input. The cost of cultivating a parcel of land depends strongly on the distance from the farmer to the plot, leading to spatially small land markets. To investigate this issue, we are able to use extremely rich datasets, and combine information on both farms and their cultivated plots (including their exact locations) for virtually all farms in Austria for a five-year period. When analyzing the takeover of parcels from farms leaving the market, we find that the distance between an exiting farm’s plot and the closest parcel of a prospective buyer farm is an important determinant of which buyer will prevail on the land market. In addition, the proximity between the farmsteads of the exiting farm and a prospective buyer farm is also important. The results suggest (i) that agricultural land markets are indeed very small and (ii) that information frictions are important in this market.
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  • Pennerstorfer, Dieter, 2023. "Farm exits and competition on the land market: Evidence from spatially explicit data," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277630, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc23:277630
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    References listed on IDEAS

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    1. Hugo Storm & Klaus Mittenzwei & Thomas Heckelei, 2015. "Direct Payments, Spatial Competition, and Farm Survival in Norway," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(4), pages 1192-1205.
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    More about this item

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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