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Replaced with revised version of paper 02/22/08.
Land markets play a crucial role in agricultural structural change. The dynamics on land marketsmainly depend on the interactions between individual farms. Agent-based modelling (ABM) providesone way to take the specific characteristics of land transactions into account, as it allows to modelinteractions between different agents as well as spatial relationships in a straightforward manner.However, reviewing the literature one can find only a few attempts of endogenized land markets inABM. Furthermore, it seems that the allocation mechanisms of these endogenized land markets arechosen rather arbitrarily and not much attention is given to an intensive discussion of the impact ofthe respective allocation mechanisms to simulation results. To close this gap the aim of this paper isthreefold: First we want to give a brief review of existing ABM with endogenized land allocationmechanisms and we identify a theoretical framework which serves as a guidance to develop a suitableand extendable land market (sub-) model. Second, we derive a number of relevant designconsiderations necessary to endogenize land transactions in an agent based modelling framework.Based on this we propose three different land market implementations which are based on auctionmechanisms. In order to be able to evaluate the different implementations not only in relative but alsoin absolute terms we furthermore propose an approach to create a global optimal allocation in termsof the resulting economic land rent. For this we use a mathematical programming approach to solvethe underlying allocation problem and the concept of average shadow prices to price the allocatedplots.In the third part we show the practical implications of different allocation mechanisms. This is doneusing the spatial and dynamic agent-based simulation model AgriPoliS as experimental laboratory. Inthat way we can analyse the properties of the respective allocation mechanisms in a realisticframework which is based on a detailed empirical calibration.
