Abstract
Due to unreasonable pricing, farmers have low enthusiasm for reclaiming their homesteads, which can be used to generate construction land quota. This paper studies how to design a feasible pricing mechanism to stimulate the enthusiasm of farmers. First, we analyze the practice that the local government gives the developers with quota the selection, the right to select the location of the land to be auctioned. Then, applying sequential auction theory, we propose first- and second-price sealed-bid sequential auction models and design quota auction pricing mechanisms. Through theoretical and numerical analysis, we obtain the equilibrium strategy and analyze the impact of selection and on developers’ bidding pricing on quota. The results show that the selection can enhance the developer’s quota bidding price and farmers’ income. And the higher the value of selection to the developer, the higher the quota bidding price and farmer’s income. Contrarily, the larger the number of developers, the smaller the quota bidding price and farmers’ income. Finally, the quota bidding price and farmers’ income in the second-price sealed-bid sequential auction are higher than in the first-price sealed-bid sequential auction.
Highlights
In order to ensure sufficient arable land for cultivating food, the Chinese central government has implemented a construction land quota system to limit the amount of cultivated land developed into construction land by local governments
In order to solve the problem caused by the insufficient construction land quota allocated by the central government, local governments encourage farmers to reclaim their idle homesteads to generate additional construction land quotas and sell them to developers in need
Similar to the first-price sealed-bid sequential auction proof, we prove that it satisfies sufficient conditions
Summary
Editor: Maurizio Naldi, LUMSA: Libera Universita Maria Santissima Assunta, ITALY. Data Availability Statement: All relevant data are within the manuscript. These funders have played an important role in review and editing of the manuscript
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