How Do “One-Time Bidding, Average Price Win” Land Auction Rules Affect Land Prices: A Quasinatural Experiment in Suzhou, China

Duo Chai, Shunru Li () and Pengyuan Zhang
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Duo Chai: School of Government, Central University of Finance and Economics, Beijing 100081, China
Shunru Li: China Economics and Management Academy, Central University of Finance and Economics, Beijing 100081, China
Pengyuan Zhang: School of Public Finance and Taxation, Hebei University of Economics and Business, Shijiazhuang 050061, China

Land, 2024, vol. 13, issue 11, 1-28

Abstract: The land price reflects the supply and demand relationship in the land market and plays an important role in regulating land use. Improving land auction rules is of great significance for avoiding abnormal fluctuations in the land market and promoting the sustainable use of land resources. To regulate the abnormal fluctuations in the state-owned land use rights’ auction prices, Chinese local governments have implemented a “sealed one-time bidding, average price wins” rule. However, limited theoretical and empirical research that assesses its policy impact exists. This study examines the policy motivations behind this rule, constructing three game models; namely, static complete information, static incomplete information, and multiperiod repeated games. By deducing bidding strategies and equilibrium results, hypotheses are formulated. A baseline difference-in-differences (DID) and a dynamic policy effect model are designed, and the Python crawler is used to obtain 1182 microland auction samples in Suzhou. This study evaluates the impact of the one-time bidding rule on the starting prices, transaction prices, and premium rates. The empirical results underwent multiple robustness tests, eliminating potential endogeneity issues and biases. The results show that while the policy is effective in restraining the premium rate, indicating the bidding intensity in single-land auctions, it proves challenging to curb the long-term rise in land prices through continuous bidding auctions. Moreover, the policy may stimulate local governments to increase auction starting prices.

Keywords: auction of land use right; state-owned land; one-time bidding auction; game analysis model; difference-in-difference (DID) model (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2024
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