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Outstanding in the Field: Evaluating Auction Markets for Farmland Using Multi-Agent Simulation

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Land acquisition and ownership is an important part of modern agriculture in North America. Given the unique nature of farmland as a good, this paper develops a multi-agent simulation of farmland auction markets in a Canadian context. The model is used to generate data on land transactions between farm agents to determine if a particular auction design or type is better suited to farmland transactions. The simulation uses three different sealed-bid auctions, as well as an English auction. The auctions are compared on the basis of efficiency, stability, and perceived surplus. We find that the form of agent learning about land markets affects both sale price and the variance of sale prices in all of the studied auctions. The second-price-sealed-bid auction generates the most perceived surplus, most equitable share of surplus, and also decreases uncertainty in the common-value element of prices. But on a macroscopic level, it appears that auction choice does not influence market structure or evolution over time.

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  • Adam Arsenault & James Nolan & Richard Schoney & Donald Gilchrist, 2012. "Outstanding in the Field: Evaluating Auction Markets for Farmland Using Multi-Agent Simulation," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 15(1), pages 1-11.
    • Handle: RePEc:jas:jasssj:2010-49-2
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    1. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
    2. Colwell, Peter F & Yavas, Abdullah, 1994. "The Demand for Agricultural Land and Strategic Bidding in Auctions," The Journal of Real Estate Finance and Economics, Springer, vol. 8(2), pages 137-149, March.
    3. Haixiao Huang & Gay Y. Miller & Bruce J. Sherrick & Miguel I. Gómez, 2006. "Factors Influencing Illinois Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 458-470.
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    5. Theo Offerman, 2002. "Efficiency in Auctions with Private and Common Values: An Experimental Study," American Economic Review, American Economic Association, vol. 92(3), pages 625-643, June.
    6. David A. King & J. A. Sinden, 1994. "Price Formation in Farm Land Markets," Land Economics, University of Wisconsin Press, vol. 70(1), pages 38-52.
    7. Balmann, Alfons, 1997. "Farm-Based Modelling of Regional Structural Change: A Cellular Automata Approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 24(1), pages 85-108.
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    Cited by:

    1. M. S. Iftekhar & A. Hailu & R. K. Lindner, 2014. "Does It Pay to Increase Competition in Combinatorial Conservation Auctions?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(3), pages 411-433, September.
    2. Jason Wood & James Nolan, 2021. "Plant location decisions in the ethanol industry: a dynamic and spatial analysis," Computational Economics, Springer;Society for Computational Economics, vol. 58(1), pages 103-132, June.
    3. Christopher N. Boyer & B. Wade Brorsen & James R. Fain, 2015. "Private‐Value Auction Versus Posted‐Price Selling: An Agent‐Based Model Approach," Intelligent Systems in Accounting, Finance and Management, John Wiley & Sons, Ltd., vol. 22(4), pages 249-262, October.
    4. Thomas Vempiliyath & Maitri Thakur & Vincent Hargaden, 2021. "Development of a Hybrid Simulation Framework for the Production Planning Process in the Atlantic Salmon Supply Chain," Agriculture, MDPI, vol. 11(10), pages 1-17, September.
    5. Borodin, Valeria & Bourtembourg, Jean & Hnaien, Faicel & Labadie, Nacima, 2016. "Handling uncertainty in agricultural supply chain management: A state of the art," European Journal of Operational Research, Elsevier, vol. 254(2), pages 348-359.
    6. Davide Natalini & Giangiacomo Bravo & Aled Wynne Jones, 2019. "Global food security and food riots – an agent-based modelling approach," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(5), pages 1153-1173, October.

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