Price Formation Under Small Numbers Competition: Evidence from Land Auctions in Singapore

26 Pages Posted: 19 Nov 2006

See all articles by Joseph T. L. Ooi

Joseph T. L. Ooi

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

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law

Geoffrey K. Turnbull

Georgia State University - Department of Economics

Abstract

This article examines the price formation process under small numbers competition using data from Singapore land auctions. The theory predicts that bid prices are less than the zero-profit asset value in these first-price sealed-bid auctions. The model also shows that expected sales price increases with the number of bidders both because each bidder has an incentive to offer a higher price and because of a greater likelihood that a high-value bidder is present. The empirical estimates are consistent with auction theory and show that the standard land attributes are reflected in auction prices as expected.

Suggested Citation

Ooi, Joseph T. L. and Sirmans, C. F. and Turnbull, Geoffrey K., Price Formation Under Small Numbers Competition: Evidence from Land Auctions in Singapore. Real Estate Economics, Vol. 34, No. 1, pp. 51-76, Spring 2006, Available at SSRN: https://ssrn.com/abstract=945529 or http://dx.doi.org/10.1111/j.1540-6229.2006.00159.x

Joseph T. L. Ooi (Contact Author)

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

4 Architecture Drive
Singapore 117566
Singapore

C. F. Sirmans

Florida State University - Department of Risk Management, Insurance, Real Estate & Business Law ( email )

Tallahasse, FL 32306
United States
850 644-4076 (Phone)

HOME PAGE: http://www.cob.fsu.edu/rmi

Geoffrey K. Turnbull

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-651-0419 (Phone)
404-651-2737 (Fax)

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