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Social Capital and the Terms of Trade for Farmland
Author(s) -
Robison Lindon J.,
Myers Robert J.,
Siles Marcelo E.
Publication year - 2002
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.1111/1058-7195.00005
Subject(s) - social capital , capital (architecture) , economics , business , agricultural economics , geography , sociology , social science , archaeology
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.