Auction Structure, Bidding Behavior and Urban Land Price: New Evidence from Two-Stage Land Auctions

Shuping Wu (), Simon Stevenson (), James Young () and Zan Yang ()
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Shuping Wu: Beijing Jiaotong University, Postal: Beijing Jiaotong University
Simon Stevenson: Strome College of Business, Old Dominion University, Postal: E.V. Williams Center for Real Estate & Department of Finance, Strome College of Business, Old Dominion University
James Young: University of Oklahoma, Postal: Michael F. Price College of Business, University of Oklahoma
Zan Yang: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm

No 25/5, Working Paper Series from Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance

Abstract: Urban land in China is state-owned and primarily allocated by the government via a two-stage auction process. Compared with auction mechanisms in other markets and countries, China’s two-stage land auctions have a unique structure in that the first stage is an open-bid survival auction with a fixed deadline. This paper uses bid history data for land auctions in Beijing to analyze jump bidding behavior, investigating its effects on subsequent bidding and the final sale price achieved. We find that jump bidding increases the likelihood that the next bid is also a jump bid and that it accelerates the bid submission process in the first stage. Furthermore, jump bidding generates two-way effects on the land price. While it prevents lower-value bidders from entering the second stage, it can also trigger a ‘jump war’ between higher-value bidders. The findings in this paper suggest alternative bidding strategies within the two-stage auction structure and also provide an auction-based behavioral explanation for urban land price dynamics in China.

Keywords: land price; land auction structure; jump bidding; sniping; bid history data (search for similar items in EconPapers)
JEL-codes: D44 L11 R32 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2025-06-25
New Economics Papers: this item is included in nep-cna, nep-des and nep-ind
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