A Model for Pricing the Construction Land Quota and Efficient Land Allocation by Using Improved Sequential Auction and Price Discount

Abstract

In this study, a two-stage sequential auction of complements is conceptualized by considering the rule of price discount. In addition, a reasonable pricing mechanism is designed for the land quota. This framework is based on the complementary characteristics of the construction land quota and the construction land in practice. The results indicate that the rule of price discount enhances the bidding price of the construction land quota and construction land. In other words, the greater the limit of price discount, the greater is the increase in the bidding price offered by bidders. Furthermore, the bidding price of the quota declines with an increase in the number of bidders and increaseswith an increase in the penalty amount for delayed construction. Accordingly, local governments should implement the rule of price discount and improve the qualification audit of bidders, in addition to appropriately raising the penalty amount for delayed construction, to raise the quota price and encourage farmers to reclaim their idle homesteads. This approach would ease conflicts between construction land demands and farmland protection, as well as promote rapid urbanisation and development of the national economy in China.