Coordination and allocation on land markets under increasing scale economies and heterogeneous actors - An experimental study

Alfons Balmann (), Konrad Kellermann, Karin Larsen, Serena Sandri and Christian Schade

No 61093, 114th Seminar, April 15-16, 2010, Berlin, Germany from European Association of Agricultural Economists

Abstract: Economies of scale and scope are often not exploited in Western agriculture. A general reason is probably that various types of transaction costs limit coordination among farmers. A more specific explanation is that coordination on land markets or machinery cooperation is difficult to achieve when farmers are heterogeneous as some kind of price differentiation is necessary for a Pareto-superior solution. This paper investigates experimentally such a coordination game with heterogeneous agents using an example inspired by agricultural land markets. The experimental findings suggest that a Pareto-optimal solution may not be found when agents are heterogeneous. The findings provide evidence for market failures and cooperation deficits as reasons for unexploited economies of scale in agriculture. Our findings are consistent with coordination failures that appear to be driven by behavioural factors such as anchoring-and-adjustment, inequity aversion, and a reverse form of winner’s curse.

Keywords: Agricultural and Food Policy; Farm Management; Land Economics/Use (search for similar items in EconPapers)
Pages: 25
Date: 2010-04
New Economics Papers: this item is included in nep-agr and nep-exp
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaa114:61093

DOI: 10.22004/ag.econ.61093

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