Land prices and technological development*

Land prices in the Netherlands are strongly influenced by technological change in agriculture. These effects are described by applying the cost-push innovation hypothesis. Land prices are the outcome of a price formation process. Market behaviour and the sampling interval of the data (annual) require the use of a simultaneous equations approach. The identification of demand and supply in such a model is discussed The statistical results of simultaneous models for two regions in the Nether-lands are presented. The estimated parameters do not lead to proper empirical identification of demand and supply. Recursive models yield better statistical results.