Bargaining and market power in a GIS-based hedonic pricing model of the agricultural land market

ABSTRACT. Buyers of farmland are usually interested in parcels for sale that are close to their own farms. With a limited number of parcels for sale, this may lead to market power in local farmland markets. The objective of this paper is to investigate whether market power affects farmland prices. Hedonic price models are adapted to allow for local market power of either sellers or buyers. A distinction is made between rural and urban farm-land markets. The results provide evidence of market power effects in rural farmland markets. However, for farmland in urban areas, market prices are dominated by speculation effects. (JEL Q15) I