Summary and conclusions: Issues and implications in the use of auctions for land privatization

Abstract

It has been shown that land privatization can be treated as a principal-agent problem. The state has the objective of maximizing social welfare in the process of the land ownership transfer, a key activity that needs to be undertaken in the move towards market economy. Given the problems besetting the agricultural land market of the transforming economies, auctions seem to be one of the best mechanisms by which this principal-agent problems can be solved. The privatization program can be implemented such that social welfare of the citizens is maximized. This was shown through the ability of a properly designed auction mechanism to ensure that the resources are allocated to its most efficient use.