In the last decade, many parts of the world experienced severe increases in agricultural land prices. This price surge, however, did not take place evenly in space and time. To better understand the spatial and temporal behavior of land prices, we employ a price diffusion model that combines features of market integration models and spatial econometric models. An application of this model to farmland prices in Germany shows that prices on a county-level are cointegrated. Apart from convergence towards a long-run equilibrium, we find that price transmission also proceeds through short-term adjustments caused by neighboring regions. Acknowledgement : Financial support from the China Scholarship Council (CSC NO.201406990006) and the Deutsche Forschungsgemeinschaft (DFG) through Research Unit 2569 Agricultural Land Markets Efficiency and Regulation is gratefully acknowledged. The authors also thank Oberer Gutachterausschuss f r Grundst ckswerte in Niedersachsen (P. Ache) for providing the data used in the analysis.