Strategic sequential bidding for government land auction sales – Evidence from Singapore

• Main Authors: AGARWAL, Sumit, LI, Jing, TEO, Ernie, CHEONG, Alan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2018
• Subjects: Land Sale Auctions; Strategic Sequential Bidding; Land Price; Housing Price; Product Differentiation; Asian Studies; Public Economics; Real Estate; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/soe_research/2014; https://ink.library.smu.edu.sg/context/soe_research/article/3013/viewcontent/Strategic_sequential_bidding_for_government_land_auction_sales_pp.pdf
• Institution: Singapore Management University

This paper studies the extent to which equilibrium auction prices are pushed up sequentially due to strategic bidding behaviors in government land auction sales. Using a unique dataset that covers the universe of tendering prices submitted by all developers for all residential land auction sales in Singapore, we find that a tenderer’s bids are significantly higher where there was a previous land parcel sold within two years and located within four kilometers. The elevated price margin decreases with time and geographic distance. Tracking sequential bids submitted by same developers over time, we find that the incumbent winner of a previous auction often participates in subsequent nearby land sales but does not necessarily win the sites. We argue that the incumbent deliberately bids up the subsequent land prices to gain pricing advantages to their own parcels.