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Social Capital and the Terms of Trade for Farmland

Author

Listed:
  • Lindon J. Robison
  • Robert J. Myers
  • Marcelo E. Siles

Abstract

Social capital is a person or group's sympathy for or sense of obligation to another person or group. This article introduces social capital into a neoclassical model of farmland exchange and shows how relationships alter the terms of trade. Empirical evidence from a survey of farmers shows that the type of relationship farmland sellers have with farmland buyers has a statistically significant and economically important effect on the minimum-sell price for farmland. Compared to the minimum-sell price when selling to a total stranger in an arm's-length transaction, farmland sellers discount prices to friendly neighbors and relatives and require a premium from unfriendly neighbors and influential people in the community.

Suggested Citation

  • Lindon J. Robison & Robert J. Myers & Marcelo E. Siles, 2002. "Social Capital and the Terms of Trade for Farmland," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 24(1), pages 44-58.
    • Handle: RePEc:oup:revage:v:24:y:2002:i:1:p:44-58.
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    File URL: http://hdl.handle.net/10.1111/1058-7195.00005
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    References listed on IDEAS

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    1. Thorstein Veblen, 1908. "On the Nature of Capital," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 22(4), pages 517-542.
    2. Lindon Robison & A. Allan Schmid & Marcelo Siles, 2002. "Is Social Capital Really Capital?," Review of Social Economy, Taylor & Francis Journals, vol. 60(1), pages 1-21.
    3. Gregory M. Perry & Lindon J. Robison, 2001. "Evaluating the Influence of Personal Relationships on Land Sale Prices: A Case Study in Oregon," Land Economics, University of Wisconsin Press, vol. 77(3), pages 385-398.
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