The regional specifity of structuralchange in agricultureAn assessment of the role of farmers’strategic behaviour on the land market

Among the family-farms in western Germany, significant regional differences are observable.They exist not only with respect to present farm-structure but also with respect to patterns ofstructural change. In the present paper, the different farm-development-strategies that causethese regional patterns are explained economically. As a central cause for their stability in acompetitive environment, the relatedness of agricultural production to the non-renewablefactor land is identified. Moreover, the coordination of the different strategies, which resultsin regional clusters, is shown to evolve endogenously in a model of strategic interaction onthe land-market. It is demonstrated that due to the existence of rents of the status quo andresulting non-linearity in farmers’ reaction-curves, coordination-failures and multiple equilibriaare possible. The theoretically derived results confirm the notion that not only farmers’decisions determine structural development but also the initial structural situation heavilyinfluences upon farmers’ decisions. The interdependence between structure and behaviour isreinforced by the important role of expectation concerning competitors’ behaviour in strategicinteraction, because these expectations are coined by experience....