Agroholdings and land rental markets: a spatial competition perspective

Abstract With the emergence of large, horizontally integrated farm enterprises especially in Eastern European countries, the question arises whether these agroholdings exercise market power in (local) land markets. Using a theoretical framework of spatial competition that accounts for the presence o...

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Bibliographic Details
Published in:European review of agricultural economics 2021-01, Vol.48 (1), p.158-206
Main Authors: Graubner, Marten, Ostapchuk, Igor, Gagalyuk, Taras
Format: Article
Language:English
Subjects:
Competition
Deforestation
Farms
Land
Markets
Prices
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Summary:Abstract With the emergence of large, horizontally integrated farm enterprises especially in Eastern European countries, the question arises whether these agroholdings exercise market power in (local) land markets. Using a theoretical framework of spatial competition that accounts for the presence of multi-farm agroholdings, we derive equilibrium prices under alternative spatial competition settings. Based on the investigation of Ukrainian farms, we provide theoretical explanations and empirical support for farms affiliated with an agroholding possessing (ceteris paribus) more land and setting higher land rental prices compared to independent farms. The results indicate that agroholdings may act as price leaders in local land markets.
ISSN:0165-1587
1464-3618
DOI:10.1093/eurrag/jbaa018