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China's land market auctions: evidence of corruption?

Cai, Hongbin, Henderson, J. Vernon and Zhang, Qinghua (2013) China's land market auctions: evidence of corruption? RAND Journal of Economics, 44 (3). pp. 488-521. ISSN 0741-6261

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Identification Number: 10.1111/1756-2171.12028


In China, urban land is allocated by leasehold sales by local officials. Attempting to end widespread corruption, the government now requires sales to be conducted publicly, by either English or "two-stage" auctions. However, corruption persists through the choice of auction format and preauction side deals between favored bidders and local officials. Two-stage auctions have a first stage where favored developers signal that auctions are "taken," deterring entry of other bidders. Empirics show that both sales prices and competition are significantly less for two-stage than English auctions. Selection on unobserved property characteristics is positive: officials divert hotter properties to two-stage auctions.

Item Type: Article
Official URL:
Additional Information: © 2013 RAND
Divisions: Geography & Environment
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HN Social history and conditions. Social problems. Social reform
Date Deposited: 07 Jan 2014 09:18
Last Modified: 20 Oct 2021 03:17
Projects: Peking University, LMEQF
Funders: Key Laboratory of Mathematical Economics and Quantity Finance, China's Ministry of Education

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