A determination of bid rents through bidding procedures

Abstract

Rent profiles in land markets with finitely many participants are derived under two bidding procedures: free-unit-size bidding and single-unit-size bidding. Free-unit-size bidding is shown to be basically equivalent to an English auction, whereas the rent determination problem under single-unit-size bidding reduces to a mathematical programming problem. An application of the latter case is provided, in which a density model of land use is shown to be a good approximation of appropriately chosen discrete models.