Mechanism of formation in the selling price of urban industrial land in China based on the multi-attribute auction theory
Jian-gang Shi, Jin-can Liu
Yuntong Building 509, School of Economics & Management, Tongji University, 1239 Siping Road, Yangpu District, Shanghai China, 200092
There is the fierce competition for investment introduction among local governments in China. Thus, the auction relationship about urban industrial land belongs to a kind of reverse auction between local government and investment enterprise. To explore the mechanism of formation in the selling price of urban industrial land, we build a multi-attribute first-score sealed-bid auction model. Our studies reveal that the selling price of urban industrial land is the decreasing function of local government’s expected comprehensive earnings from the investment introduction, the intensity of competition for investment introduction among local governments or its cost factors of providing some attributes. However, it is the increasing function of enterprise's weights for different attributes. They appropriately explain why the selling price of urban industrial land has been at the low level for a long time in China. Yet, the comprehensive earnings and the realization of land asset value are not a pair of irreconcilable conflicts. Local governments should prioritize the attributes, which the investment enterprises care about, then reduce the cost of providing these attributes. In the end, it will resolve the interest conflicts in the process of industrial land operation.