Are Auction Price Premiums Real? Evidence from Farmland Sales

Rabail Chandio, Sergio Lence and Wendong Zhang

No 404337, 2026 Annual Meeting, July 26 - 28, 2026, Kansas City, Missouri from Agricultural and Applied Economics Association

Abstract: Farmland auctions are widely used, particularly for high-quality parcels, yet their effect on sale price remains unclear. Using detailed transaction data, we show that although higher-quality ground is more likely to be sold via auction, auctions are associated with lower prices on average after controlling for observable characteristics. We reconcile this apparent contradiction by demonstrating that auction performance is highly dependent on land quality: auctions perform relatively well for higher and homogeneous quality, easily observable parcels but generate worse outcomes for lower-quality or more ambiguous land. These findings highlight that auctions are not universally “effective”, but instead operate as a context-dependent sales mechanism shaped by the underlying characteristics of the asset.

Keywords: Agricultural Finance; Farm Management (search for similar items in EconPapers)
Pages: 23
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea26:404337

DOI: 10.22004/ag.econ.404337

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