First-Price Sealed-Bid Tender versus English Open Auction: Evidence from Land Auctions

Real Estate Economics, Forthcoming

Posted: 27 Nov 2012

See all articles by Yuen Leng Chow

Yuen Leng Chow

National University of Singapore - Institute of Real Estate Studies

Joseph T. L. Ooi

National University of Singapore (NUS) - Department of Real Estate

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Date Written: November 27, 2012

Abstract

This paper compares whether the first-price sealed-bid tender or the ascending English open auction generates higher revenue for the seller. Using a unique data for land sales and accounting for the presence of an endogenous discrete mechanism choice variable, our results show that the first-price sealed-bid tender generates a lower land price, in the range of 1.2% to 9.6%, than the English open auction. Our results validate the theoretical prediction that open auctions result in higher prices because bidders can infer other bidders’ information by observing their bids in the common value auction paradigm.

Keywords: first-price sealed-bid tender, ascending English auction, vacant land

Suggested Citation

Chow, Yuen Leng and Ooi, Joseph T. L., First-Price Sealed-Bid Tender versus English Open Auction: Evidence from Land Auctions (November 27, 2012). Real Estate Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2181529

Yuen Leng Chow (Contact Author)

National University of Singapore - Institute of Real Estate Studies ( email )

21 Heng Mui Keng Terrace #04-02
119613
Singapore
+65-66015040 (Phone)

Joseph T. L. Ooi

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

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