Tenure Insecurity, Adverse Selection, and Liquidity in Rural Land Markets

Derek Stacey

No 273821, Queen's Economics Department Working Papers from Queen's University - Department of Economics

Abstract: A theory of land market activity is developed for settings where there is uncertainty and private information about the security of land tenure. Land sellers match with buyers in a competitive search environment, and an illiquid land market emerges as a screening mechanism. As a consequence, adverse selection and an insecure system of property rights stifle land market transactions. The implications of the theory are tested using household level data from Indonesia. As predicted, formally titled land is more liquid than untitled land in the sense that ownership rights are more readily trans- ferable. Additional implications of the theory are verified empirically by constructing a proxy variable for land tenure security and studying the differences between markets for unregistered land across Indonesian provinces. Regional land market activity is appropriately linked to the distribution of the proxy variable.

Keywords: Financial Economics; Land Economics/Use (search for similar items in EconPapers)
Pages: 58
Date: 2011-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/273821/files/qed_wp_1269.pdf (application/pdf)

Related works:
Working Paper: Tenure Insecurity, Adverse Selection, And Liquidity In Rural Land Markets (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:quedwp:273821

DOI: 10.22004/ag.econ.273821

Access Statistics for this paper

More papers in Queen's Economics Department Working Papers from Queen's University - Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().