Price gap between non-local and local buyers on the farmland market: a potential outcome approach

Sauveur Giannoni (), Olivier Beaumais and Caroline Tafani ()
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Olivier Beaumais: CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, LISA - Laboratoire « Lieux, Identités, eSpaces, Activités » (UMR CNRS 6240 LISA) - CNRS - Centre National de la Recherche Scientifique - Università di Corsica Pasquale Paoli [Université de Corse Pascal Paoli]
Caroline Tafani: LISA - Laboratoire « Lieux, Identités, eSpaces, Activités » (UMR CNRS 6240 LISA) - CNRS - Centre National de la Recherche Scientifique - Università di Corsica Pasquale Paoli [Université de Corse Pascal Paoli]

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Abstract: The influx of non-local buyers into the farmland market is commonly held responsible for the exclusion of local buyers. We study the case of the seaside farmland market in Corsica between 1998 and 2008. Rather than the exclusion of locals, the data show a massive price gap between non-local and local buyers. In order to assess the reality and magnitude of this price gap, we first estimate standard hedonic price models, while controlling for omitted variable bias using an innovative method recently proposed by Oster (2017). Beyond the estimation of standard hedonic price models, we show that the estimation of a general potential outcome model allows to capture more finely the observable and non-observable heterogeneity related to the preferences of non-local and local buyers. Our findings emphasize that, although willing to pay high prices due to their specific preferences, non-local buyers can coexist with local buyers, who pay significantly lower prices.

Keywords: local buyers' exclusion; price gap; general potential outcome model (search for similar items in EconPapers)
Date: 2019-12-09
New Economics Papers: this item is included in nep-agr
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