Competitive Implications of Land Tenure Institutions: Using Oligopoly Theory to Estimate the Impacts on Māori of Owner Limits in New Zealand’s Native Lands Acts (Working paper)

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Meade, Richard
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2021
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Abstract

Māori tribes sold large amounts of land at low prices due to 19th century land tenure institutions in Aotearoa/New Zealand. Foremost was the 1865 Native Lands Act’s “10 owner rule”, which induced subsets of Māori landowners to competitively sell collectively-owned tribal lands rather than to maximise their value through coordinated land sales. We propose a parsimonious method for estimating the loss to Māori from the 10 owner rule as it formally and informally applied, comparing coordinated (i.e. monopoly) land sales quantities, prices and profits with those of uncoordinated (i.e. oligopolistic) sales. The ratios of these measures is shown to depend only on the number of competing sellers, and the price elasticity of land demand. The latter is estimated using 19th century land sales data for Māhaki, a Poverty Bay tribe, for which coordinated land sales would have resulted in prices up to 5.5 times higher than actual, up to 87% less land being sold, and land sales profits up to 7.1 times higher. This illustrates the competitive impacts of land tenure institutions, and is relevant for assessing the historical losses of landowners prejudiced by them.

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Economic history

Industry economics and industrial organisation

Economic theory

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Meade, R, Competitive Implications of Land Tenure Institutions: Using Oligopoly Theory to Estimate the Impacts on Māori of Owner Limits in New Zealand’s Native Lands Acts, 2021

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