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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 a theoretical explanation and empirical support that farms affiliated with an agroholding possess (ceteris paribus) more land and set higher land rental prices compared to independent farms. The results indicate that agroholdings can act as price leaders in local land markets.

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