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How Do Landowners Price their Lands during Land Expropriation and the Motives Behind It: An Explanation from a WTA/WTP Experiment in Central Beijing

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  • Zhongyu He
  • Yasushi Asami

Abstract

Compensation paid to property owners for land expropriation is always a controversial topic, partly due to the difficulty in revealing households’ true valuation of their housing. This paper estimates and discusses the widely observed ‘willingness to accept–willingness to pay’ (WTA–WTP) gap for surveyed residents of their own houses during land expropriation. By testing several hypotheses interpreting the WTA–WTP disparity from previous studies, the paper tries to establish the incentive for households’ decision-making. The paper employs a contingent valuation method with data from 315 household interviews in central Beijing, China. The paper reports an average WTA/WTP ratio of 3.74 and reaches the conclusion that in our case the high compensation required by property owners largely derives from opportunistic pricing behaviour rather than sentimental attachment to the dwellings that is unobservable in the market price, and that the WTA of the residents is intentionally overpriced.

Suggested Citation

  • Zhongyu He & Yasushi Asami, 2014. "How Do Landowners Price their Lands during Land Expropriation and the Motives Behind It: An Explanation from a WTA/WTP Experiment in Central Beijing," Urban Studies, Urban Studies Journal Limited, vol. 51(2), pages 412-427, February.
    • Handle: RePEc:sae:urbstu:v:51:y:2014:i:2:p:412-427
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    Cited by:

    1. Helen Bao & Chunming Meng, 2017. "Loss Aversion and Residential Property Development Decisions in China: A Semi-Parametric Estimation," ERES eres2017_156, European Real Estate Society (ERES).
    2. Li, Xin & Kleinhans, Reinout & van Ham, Maarten, 2017. "Ambivalence in Place Attachment: The Lived Experiences of Residents in Declining Neighbourhoods Facing Demolition in Shenyang, China," IZA Discussion Papers 10515, Institute of Labor Economics (IZA).
    3. Bao, Helen X. H. & Meng, Charlotte Chunming, 2017. "Loss Aversion and Residential Property Development Decisions in the People’s Republic of China: A Semi-Parametric Estimation," ADBI Working Papers 640, Asian Development Bank Institute.
    4. repec:gam:jsusta:v:7:y:2015:i:12:p:16849-16865:d:60972 is not listed on IDEAS
    5. Cao, Yingui & Dallimer, Martin & Stringer, Lindsay C. & Bai, Zhongke & Siu, Yim Ling, 2018. "Land expropriation compensation among multiple stakeholders in a mining area: Explaining “skeleton house” compensation," Land Use Policy, Elsevier, vol. 74(C), pages 97-110.
    6. Yongchun Yang & Deli Zhang & Qingmin Meng & Corrin McCarn, 2015. "Urban Residential Land Use Reconstruction under Dual-Track Mechanism of Market Socialism in China: A Case Study of Chengdu," Sustainability, MDPI, Open Access Journal, vol. 7(12), pages 1-17, December.
    7. Gong, Cynthia M. & Lizieri, Colin & Bao, Helen X.H., 2019. "“Smarter information, smarter consumers”? Insights into the housing market," Journal of Business Research, Elsevier, vol. 97(C), pages 51-64.
    8. Yongle Li & Bangrong Shu & Xiaoping Shi & Yu Zhu, 2017. "Variation of Land-Expropriated Farmers’ Willingness: A Perspective of Employment and Inhabitance," Sustainability, MDPI, Open Access Journal, vol. 9(7), pages 1-1, June.

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