Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/67800 
Authors: 
Year of Publication: 
2011
Series/Report no.: 
Queen's Economics Department Working Paper No. 1269
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
A theory of land market activity is developed for settings where there is uncertainty and private information about the security of land tenure. Land sellers match with buyers in a competitive search environment, and an illiquid land market emerges as a screening mechanism. As a consequence, adverse selection and an insecure system of property rights stifle land market transactions. The implications of the theory are tested using household level data from Indonesia. As predicted, formally titled land is more liquid than untitled land in the sense that ownership rights are more readily transferable. Additional implications of the theory are verified empirically by constructing a proxy variable for land tenure security and studying the differences between markets for unregistered land across Indonesian provinces. Regional land market activity is appropriately linked to the distribution of the proxy variable.
Subjects: 
Competitive Search
Land Markets
Tenure Security
Liquidity
JEL: 
D23
D83
Q15
R23
Document Type: 
Working Paper

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