Economic effects of land fragmentation

More about the book

The restitution of land property in post-socialistic Bulgaria has resulted in significant fragmentation of land ownership and use. Violeta Dirimanova’s work aims to enhance understanding of how this fragmentation impacts private property rights, bargaining processes, and contractual choices among landowners and users. The study examines both formal and informal rules governing property rights, as well as the attitudes and decisions of participants in land markets. Drawing on three theories from New Institutional Economics—property rights theory, transaction costs theory, and agricultural contracting theory—Dirimanova formulates general propositions that are then explored within the Bulgarian context. The empirical analysis utilizes data from three regions with varying levels of land fragmentation. Findings indicate that fragmentation diminishes landowners’ incentives to exercise their rights individually, favoring joint action instead. It also hampers the functioning of land rental and sale markets, limiting agrarian contract options and preventing landowners from capitalizing on their assets. Furthermore, increasing fragmentation alters the bargaining dynamics, making local and absentee landowners reliant on influential farmers who dictate contract terms. In this scenario, power derives not from ownership but from the capacity to institutionalize interests in land use.