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The formation of offer prices in farmland markets: A hedonic price approach

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  • Temel, Tugrul

Abstract

This study develops a game-theoretic framework to examine the preservation and capitalization effects of government farmland preservation policies. More specifically, emphasis is given to the effects of such policies on the number and type of land buyers, the distribution of offer price, and the mean waiting period. The results suggest that, in the context of the agricultural zoning policy, the final impact on the reservation price and mean waiting period depends on the magnitude of changes in the number and spread of the type of buyers.

Suggested Citation

  • Temel, Tugrul, 2011. "The formation of offer prices in farmland markets: A hedonic price approach," MPRA Paper 31921, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:31921
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    File URL: https://mpra.ub.uni-muenchen.de/31921/1/MPRA_paper_31921.pdf
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    References listed on IDEAS

    as
    1. Tavernier, Edmund M. & Li, Farong & Temel, Tugrul T., 1996. "Search Theory Risk Preference And Farmland Preservation," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(1), April.
    2. Raymond B. Palmquist, 1989. "Land as a Differentiated Factor of Production: A Hedonic Model and Its Implications for Welfare Measurement," Land Economics, University of Wisconsin Press, vol. 65(1), pages 23-28.
    3. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
    4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    5. Tavernier, Edmund M. & Li, Farong, 1995. "Effectiveness Of Use-Value Assessment In Preserving Farmland: A Search-Theoretic Approach," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(02), December.
    6. J. J. McCall, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, Oxford University Press, vol. 84(1), pages 113-126.
    7. John C. Harsanyi, 1967. "Games with Incomplete Information Played by "Bayesian" Players, I-III Part I. The Basic Model," Management Science, INFORMS, vol. 14(3), pages 159-182, November.
    8. Feng Xu & Ron C. Mittelhammer & Paul W. Barkley, 1993. "Measuring the Contributions of Site Characteristics to the Value of Agricultural Land," Land Economics, University of Wisconsin Press, vol. 69(4), pages 356-369.
    9. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
    10. David M. Henneberry & Richard L. Barrows, 1990. "Capitalization of Exclusive Agricultural Zoning into Farmland Prices," Land Economics, University of Wisconsin Press, vol. 66(3), pages 249-258.
    11. Steven Stern, 1990. "The Effects of Firm Optimizing Behaviour in Matching Models," Review of Economic Studies, Oxford University Press, vol. 57(4), pages 647-660.
    12. W. Patrick Beaton, 1991. "The Impact of Regional Land-Use Controls on Property Values: The Case of the New Jersey Pinelands," Land Economics, University of Wisconsin Press, vol. 67(2), pages 172-194.
    13. Tavernier, Edmund M. & Li, Farong, 1995. "Effectiveness of Use-value Assessment in Preserving Farmland: A Search-theoretic Approach," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 27(02), pages 626-635, December.
    14. Mark A. Satterthwaite & Steven R. Williams, 1989. "The Rate of Convergence to Efficiency in the Buyer's Bid Double Auction as the Market Becomes Large," Review of Economic Studies, Oxford University Press, vol. 56(4), pages 477-498.
    15. Engelbrecht-Wiggans, Richard & Milgrom, Paul R. & Weber, Robert J., 1983. "Competitive bidding and proprietary information," Journal of Mathematical Economics, Elsevier, vol. 11(2), pages 161-169, April.
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    More about this item

    Keywords

    hedonic price; Bayesian approach; farm land valuation; government farm policy.;

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

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