Parcel or Bundle? On the Effects of Transaction Composition on Farmland Prices

Lars Isenhardt, Stefan Seifert, Theelke Wiltfang and Silke Hüttel

No 355333, Agricultural Economics Society (AES) 98th Annual Conference, The University of Edinburgh, Edinburgh, UK, March 18-20, 2024 from Agricultural Economics Society (AES)

Abstract: Landowners owning several parcels need to decide whether to sell their land as a bundle or each parcel separately. While transaction, search and bargaining costs may suggest cost savings from selling a bundle, for farmers buying a bundle may appear less attractive. In thinly traded and locally specific farmland markets, distance cost for agricultural buyers can be price relevant, also their bargaining position. This makes the question for sellers a non-trivial one. We hypothesize that parcel bundles are less attractive, particularly for farmer buyers, and thus achieve lower prices. We investigate this hypothesis using a rich data set of 24,527 farmland transactions of single parcels and lot bundles in eastern Germany from 2000 to 2022. Doubly robust matching results indicate, on average, 6.7% lower prices for transactions of parcel bundles compared to similar transactions of single parcels. Landowners should carefully evaluate gains of selling parcels separately against time and transaction costs.

Keywords: Demand and Price Analysis; Land Economics/Use (search for similar items in EconPapers)
Pages: 26
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aes024:355333

DOI: 10.22004/ag.econ.355333

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