Monitoring the Functioning of Local Agricultural-Land Markets: Research Methods and Results

This paper presents the results of monitoring the functioning of local agricultural-land markets; it identifies the reasons why the ownership rights market becomes monopolized, and why a monopolistic competition develops in the management rights market. It also substantiates the determinants that restrict the development of local agricultural-land markets, explains the effects of market signals and informal institutes on the redistribution of agricultural land between land users. With evidence from a single Russian region, Volgograd Oblast, we find out that such re-distribution of land between the market actors depends on the form of ownership as well as on institutional restrictions. It is shown that the high level of transaction costs is due to the actions of the Federal Government and cannot be significantly reduced at the actor or municipality level, which necessitates the need for developing such a targeted program to institutionalize the agricultural-land market that would facilitate strengthening the land-control institute, minimizing the transaction costs of specifying the land-ownership rights and the costs of information support for the market, which in its turn will motivate the market actors to use land more efficiently.