An empirical model of the U.K. land market and the impact of price policy on land values and rents

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Abstract
With a view to examining the impact of E.C. product price changes on land values and rents in the U.K., econometric models are developed to show the effect of farm incomes on these variables. The long-run effect conforms closely with the often expressed theoretical view that the benefits of farm support policies are capitalised into higher land values. The elasticity of net farm income with respect to product prices is then calculated and, combined with coefficient estimates from the econometric models, indicates that a 1% increase in product prices would, ceteris paribus, raise land prices by about 10% and rents by almost 30% in the long run.

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