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Auctions vs Negotiations under Corruption: Evidence from Land Sales in China

Author

Listed:
  • Alper Arslan

    (Department of Economics at the University of Texas at San Antonio)

  • Robert Clark

    (Queen's University)

  • Qidi Hu

    (Queen's University)

Abstract

This study investigates whether corruption differentially affects contracting through auctions and negotiations. Using data on Chinese land-market transactions, where corruption is known to be present, we first show that, on average, it exerts similar effects on transactions carried out via auctions and negotiation. However, this finding masks important heterogeneity – auctionsfeaturing healthy competition are less affected by corruption, and significantly less so than negotiation. We then develop a simple model of bidding under the possibility of corruption that rationalizes our findings.

Suggested Citation

  • Alper Arslan & Robert Clark & Qidi Hu, 2025. "Auctions vs Negotiations under Corruption: Evidence from Land Sales in China," Working Paper 1524, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1524
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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1524.pdf
    File Function: First version 2025
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