Abstract
This study examines whether decentralized auctioning of public agricultural land results in higher land prices in comparison to auctioning via a centralized agency. Decentralization reforms in Ukraine, first, mandated local governments to manage communal land and later transferred agricultural land in their jurisdictions. We compare the resulting land prices of centrally and locally organized auctions and evaluate whether land-use concentration affected auction outcomes. Using unique datasets on land auctions from 2014 to 2020, we find that land plots auctioned locally by rural municipalities generate more competitive land rental outcomes with higher land rental prices. In addition, land concentration is found to negatively affect land rental prices and auction markups. Based on the results, we discuss policy implications for the management of public agricultural land in weak institutional settings.
Highlights
While auctions are believed to be the most efficient tool of land transactions, the institutional environment necessary for them to func tion effectively is analyzed to a lesser extent
Farmland auctioning has recom mended itself as a non-discriminatory tool (Croonenbroeck et al, 2019) that can compensate for a low demand due to thin markets (Hüttel et al, 2014)
Estimating a logit model for propensity scores estimation and using different matching techniques, we find very similar results as portrayed in Table 2.13 In particular, we find that local governments were generating on average 30.6% higher rental prices whereas the analogous estimation with the spatial autoregressive models with autoregressive disturbances” (SARAR) model produced 25.8% price markup
Summary
While auctions are believed to be the most efficient tool of land transactions, the institutional environment necessary for them to func tion effectively is analyzed to a lesser extent. Farmland auctioning has recom mended itself as a non-discriminatory tool (Croonenbroeck et al, 2019) that can compensate for a low demand due to thin markets (Hüttel et al, 2014) Considering these advantages, many Eastern European countries organized the distribution of state-owned agricultural land via auctions (Hartvigsen, 2014). Auctioning procedures are typically highly regulated, it is unclear to which extent they can leave room for manipulation and preferential treatment in settings with weak institutions. It remains unclear if and under which conditions decentralization of agricultural land auc tioneering can minimize misuse and maximize land prices in these contexts
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
