Impact of Farm Size on the Bidding Potential for Agricultural Land

Duane G. Harris and Richard F. Nehring

American Journal of Agricultural Economics, 1976, vol. 58, issue 2, 161-169

Abstract: A theoretical model is constructed to determine the maximum bid price that would be made for an acre of land by a decisionmaker with a given set of characteristics, capabilities, and expectations. The variables included that have an impact on the maximum bid price are net income, income variability, wealth, degree of risk aversion, marginal income tax rate, rate of pure time preference, and expected rate of growth in land income and prices. A numerical illustration of the model, developed for cash-grain farmers in Iowa, demonstrates the relative importance of the variables in determining bid-price differentials among farm-size classes.

Date: 1976
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