Farmland Prices in the Presence of Transaction Costs: A Cautionary Note

8 Pages Posted: 24 Mar 2020

See all articles by Sergio H. Lence

Sergio H. Lence

Iowa State University - Department of Economics

Date Written: November 2001

Abstract

Explicit consideration of transaction costs is highly relevant for modeling farmland price behavior in a realistic manner. Unfortunately, there are numerous theoretical and empirical difficulties associated with doing so. From a research standpoint, such difficulties greatly increase the likelihood of mistakes in the theoretical derivations and/or in the design and application of empirical methods, thereby undermining the validity of the ensuing findings. This article highlights these issues by discussing the theoretical and empirical pitfalls of two seminal recent articles analyzing farmland prices in the presence of transaction costs.

Keywords: land economics, land prices, land transfer, transaction costs, Q150

Suggested Citation

Lence, Sergio H., Farmland Prices in the Presence of Transaction Costs: A Cautionary Note (November 2001). American Journal of Agricultural Economics, Vol. 83, Issue 4, pp. 985-992, 2001, Available at SSRN: https://ssrn.com/abstract=3558625 or http://dx.doi.org/10.1111/0002-9092.00224

Sergio H. Lence (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States

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