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Can land market regulations fulfill their promises?

Florian Heinrich, Franziska Appel and Alfons Balmann

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: After land prices in Germany increased continuously since 2006, policy makers, representatives of farmers' unions, NGOs, and farmers started and continued to discuss or propose new land market regulations to stop price increases and to protect particularly smaller farmers. In this paper we analyze different types of regulations for the land rental market with the agent-based model AgriPoliS. Our simulation results show that price and farm size limitations may inhibit rental price increases and reduce structural change. The regulations do however not lead to a conservation in the number of small farms; neither do they have a substantial positive impact on their profitability and competitiveness. Many small farms still exit agricultural production and only few are able to grow into a larger size class. Beyond redistributional costs, e.g. beared by landowners, economic and social costs result from reduced average economic land rents, less regional value-added and less employment caused by a reduced functionality of the land market and biased incentives.

Keywords: structural change; land market; land market regulation; agent-based modeling (search for similar items in EconPapers)
JEL-codes: Q15 Q18 C63 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-agr, nep-cmp, nep-hme, nep-ore and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:208388

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