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Auction mechanism on construction land quota with selection on land location

Author

Listed:
  • Yang Deng
  • Weidong Meng
  • Bo Huang
  • Jingyu Liu

Abstract

Due to unreasonable pricing, farmers have low enthusiasm for reclaiming their homesteads, which can be used to generate construction land quota. This paper studies how to design a feasible pricing mechanism to stimulate the enthusiasm of farmers. First, we analyze the practice that the local government gives the developers with quota the selection, the right to select the location of the land to be auctioned. Then, applying sequential auction theory, we propose first- and second-price sealed-bid sequential auction models and design quota auction pricing mechanisms. Through theoretical and numerical analysis, we obtain the equilibrium strategy and analyze the impact of selection and on developers’ bidding pricing on quota. The results show that the selection can enhance the developer’s quota bidding price and farmers’ income. And the higher the value of selection to the developer, the higher the quota bidding price and farmer’s income. Contrarily, the larger the number of developers, the smaller the quota bidding price and farmers’ income. Finally, the quota bidding price and farmers’ income in the second-price sealed-bid sequential auction are higher than in the first-price sealed-bid sequential auction.

Suggested Citation

  • Yang Deng & Weidong Meng & Bo Huang & Jingyu Liu, 2022. "Auction mechanism on construction land quota with selection on land location," PLOS ONE, Public Library of Science, vol. 17(1), pages 1-25, January.
    • Handle: RePEc:plo:pone00:0263075
    DOI: 10.1371/journal.pone.0263075
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    References listed on IDEAS

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    1. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
    2. Leufkens, Kasper & Peeters, Ronald & Vermeulen, Dries, 2010. "Sequential auctions with synergies: The paradox of positive synergies," Economics Letters, Elsevier, vol. 109(3), pages 139-141, December.
    3. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
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