Price dispersion in farmland markets: What is the role of asymmetric information?
Lebenswissenschaftliche Fakultät
This article investigates the role played by informational cost in agricultural land markets
to explain price dispersion. Based on a hedonic model under incomplete information,
we build a two-tier stochastic frontier. By linking costs of being information deficient to
agent characteristics such as degree of professionalism, we identify relative price effects
of buyers and sellers related to search. We compile a comprehensive data set of more than
10,000 transactions in Saxony-Anhalt, Germany, between 2014 and 2017. We find institutional
sellers to achieve the lowest losses resulting from information deficiency while
tenant buyers can benefit from informational advantages. We conclude that Germany’s
policy-makers can do more to support market transparency.
