Analyzing individual rent price ratios in eastern German agricultural land markets: A GAMLSS approach

Abstract

AbstractThis study explores the rent price ratio in agricultural land markets, crucial for evaluating market efficiency, policy needs, and farmer decision‐making. Traditionally, the analyses faced challenges due to the absence of concurrent sale and rent data for the same land, potentially leading to biased results. This research avoids this problem by utilizing a unique dataset from Eastern Germany, encompassing auction data from 2016 to 2019. This dataset is distinctive, containing both the purchase and lease price offers by individual farmers for the same agricultural land at a single point. Thus, this study overcomes the conventional limitations of using aggregated or non‐contemporaneous data. Hence, the focal point is to unravel the intricate relationship between individual rent price ratios and a myriad of influencing factors, including land characteristics and local farming structures. The use of Generalized Additive Models for Location, Shape, and Scale provides a robust framework for this analysis, offering a nuanced understanding of the distributional properties of individual rent price ratios. The study provides robust empirical evidence that highlights the need for adaptive and region‐specific policies if policy makers insist on intervening in the agricultural land market. Furthermore, promising points of departure for future research are identified. [EconLit Citation: Q15].