On the price effect of a right-of-first-refusal in farmland auctions

Lars Isenhardt, Stefan Seifert and Silke Huettel
Authors registered in the RePEc Author Service: Silke Hüttel

No 312053, 95th Annual Conference, March 29-30, 2021, Warwick, UK (Hybrid) from Agricultural Economics Society - AES

Abstract: Current European Union legislation offers public authorities to grant a right of first refusal (RFR) in farmland auctions with public tenders in favour of the current tenant. That is, tenants can purchase the auctioned lot by matching the highest bid. Granting this right secures tenants to buy the land they use; however, it may deter other potential buyers’ auction participation and incentivise bidders to adjust their strategies. A RFR for tenants is thus hypothesised to decrease the number of bidders and lower sales prices. Empirical evidence seems lacking thus far; in this paper, we target at closing this gap by analysing a tenants’ RFR effect on the number of bidders and winning bids in first-price privatization auctions in eastern Germany. Using around 4,000 land auction results in one German Federal State over 2007-2018 by two agencies that differ in granting the RFR to tenants, we combine non-parametric nearest neighbour matching based on the Mahalanobis distance with parametric post-matching regressions. Our results indicate that the RFR reduces competition by an average 8.3% bidders per auction and lowers the prices paid in land auctions by 16.7 %.

Keywords: Land Economics/Use; Farm Management (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-des
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/312053/files/L ... mland%20auctions.pdf (application/pdf)

Related works:
Working Paper: On the price effect of a right of first refusal in farmland auctions (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aesc21:312053

DOI: 10.22004/ag.econ.312053

Access Statistics for this paper

More papers in 95th Annual Conference, March 29-30, 2021, Warwick, UK (Hybrid) from Agricultural Economics Society - AES Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().