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The regional specifity of structural change in agriculture: An assessment of the role of farmers’ strategic behaviour on the land market

  • Margarian, Anne
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    Among the family-farms in western Germany, significant regional differences are observable. They exist not only with respect to present farm-structure but also with respect to patterns of structural change. In the present paper, the different farm-development-strategies that cause these regional patterns are explained economically. As a central cause for their stability in a competitive environment, the relatedness of agricultural production to the non-renewable factor land is identified. Moreover, the coordination of the different strategies, which results in regional clusters, is shown to evolve endogenously in a model of strategic interaction on the land-market. It is demonstrated that due to the existence of rents of the status quo and resulting non-linearity in farmers’ reaction-curves, coordination-failures and multiple equilibria are possible. The theoretically derived results confirm the notion that not only farmers’ decisions determine structural development but also the initial structural situation heavily influences upon farmers’ decisions. The interdependence between structure and behaviour is reinforced by the important role of expectation concerning competitors’ behaviour in strategic interaction, because these expectations are coined by experience.

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    File URL: http://purl.umn.edu/59522
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    Paper provided by Humboldt University Berlin, Department of Agricultural Economics in its series Structural Change in Agriculture/Strukturwandel im Agrarsektor (SiAg) Working Papers with number 59522.

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    Date of creation: Sep 2009
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    Handle: RePEc:ags:huscpw:59522
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    1. Sandri, Serena & Schade, Christian & Mußhoff, Oliver & Odening, Martin, 2010. "Holding on for too long? An experimental study on inertia in entrepreneurs' and non-entrepreneurs' disinvestment choices," Journal of Economic Behavior & Organization, Elsevier, vol. 76(1), pages 30-44, October.
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