Seminar: Farmland Values, Bidder Behaviour, Land Auctions: A Structural Estimation Approach for Eastern Germany
Silke Hüttel, professor in agricultural production economics at the University of Bonn, will present her paper 'Farmland Values, Bidder Behaviour, Land Auctions: A Structural Estimation Approach for Eastern Germany' at an open seminar at Department of Food and Resource Economics.
This paper targets at analyzing the price formation in first-price sealed bid land auctions during the privatization process of formerly state-owned land. The analysis is based on a representative data set for Eastern Germany including winning bids, bidder characteristics and land amenities. We pursue a structural modeling approach, in which the distributions of latent land values for different bidder groups are derived from the Bayes-Nash equilibrium of the auction. By applying nonparametric techniques, we cannot find empirical evidence for asymmetric bidder structures while differentiating between legal entities, tenancy status and nationality of bidders. Our findings challenge the hypothesis that land privatization via auctions discriminates certain buyer groups. Moreover, we do not find evidence for the dominance of foreign investors, an argument that is often used to justify stricter regulation of agricultural land markets.