Empirical analysis of farm level spatial interactions and their role for aggregated policy impact analysis

• Applicant: Professor Dr. Thomas Heckelei, since 5/2019
• Subject Area: Agricultural Economics, Agricultural Policy, Agricultural Sociology
• Term: from 2015 to 2020
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 275562947

The behavior of farms with respect to growth, specialization and survival is not only determined by their own motives and characteristics or the general economic environment, but also strongly depends on the behavior of other farms. Particularly the behavior of farms in the direct neighborhood matters, leading to interactions that are spatial in nature (e.g. competition on the land market, knowledge transfer, etc.). These spatial interactions on the individual farm level are important for policy analysis. Negative/positive interaction can reduce/amplify the effects and hence increase/decrease the cost of policies substantially. An understanding of these interactions is therefore crucial for policy assessment and design. So fare empirical studies on the spatial interaction between individual farms are limited, most spatial studies focus on the regional level. Using a unique spatial explicit data set for Norway we showed in previous work that interactions between farms are indeed important for farm survival and for policy assessment. Here, we will extend this work by determining the different channels of interaction that previously remained unobserved. Furthermore, we analyze the importance of spatial interactions for farm growth and specialization by exploiting the previously unused panel structure of the Norwegian data.A central theme in the project reflected in all subparts is a strong focus on the endogeneity problems of spatial regression models and identification strategies to address these problems. In this respect, the project contributes to a very recent strand of literature questioning the mainstream use of spatial econometrics methods.

• DFG Programme: Research Grants
• Ehemaliger Antragsteller: Dr. Hugo Storm, until 4/2019