Local buyers’ exclusion through price on the farmland market: a potential outcome approach

Abstract

ABSTRACT The influx of non-local buyers into the land market is commonly held responsible for the exclusion of local buyers through price. We study the seaside farmland market in Corsica. A massive price gap between non-local and local buyers is observed. To explore this gap, we rely on a treatment effect approach. We first estimate hedonic price models, while controlling for omitted variable bias using an innovative method. We go further and estimate a general potential outcome model which allows capturing observable and unobservable preference heterogeneity between buyers. We find that the price gap indeed reflects preference heterogeneity, suggesting market segmentation at work.