Social Capital and the Terms of Trade for Farmland

Posted: 23 Nov 2002

See all articles by Lindon J. Robison

Lindon J. Robison

Michigan State University - Department of Agricultural Economics

Robert J. Myers

Michigan State University - Department of Agricultural Economics

Marcelo Siles

Michigan State University

Abstract

Social capital is a person or group's sympathy for or sense of obligation to another person or group. This article introduces social capital into a neoclassical model of farmland exchange and shows how relationships alter the terms of trade. Empirical evidence from a survey of farmers shows that the type of relationship farmland sellers have with farmland buyers has a statistically significant and economically important effect on the minimum-sell price for farmland. Compared to the minimum-sell price when selling to a total stranger in an arm's-length transaction, farmland sellers discount prices to friendly neighbors and relatives and require a premium from unfriendly neighbors and influential people in the community.

Suggested Citation

Robison, Lindon J. and Myers, Robert J. and Siles, Marcelo, Social Capital and the Terms of Trade for Farmland. Review of Agricultural Economics, Vol. 24, pp. 44-58, 2002, Available at SSRN: https://ssrn.com/abstract=313711

Lindon J. Robison (Contact Author)

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

Robert J. Myers

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States
517-432-3649 (Phone)

Marcelo Siles

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

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