Price Formation Under Small Numbers Competition: Evidence from Land Auctions in Singapore
26 Pages Posted: 19 Nov 2006
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: 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
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