Analysis on the Auction Mechanism of State-owned Land Considering Security Housing Factors

Abstract

After 2008, there are some new forms of stateowned land auction in China, such as Limited Housing Price Auction (LHPA), Limited Land Price Auction (LLPA) and Limited Land Price Auction with Security House (LLPA-SH). This paper discusses the implementation of the Limited Land Price Auction with Security House (LLPA-SH) on the basis of Bayesian equilibrium, and gives the conditions for the implementation of the truth-telling mechanism through the introduction of the security housing factor. The results show that both LLPA and LLPA-SH can accomplish the goal of the optimal allocation and utilization of resources. When private information exists, social welfare is primarily a trade-off between consumers and real estate developers, while under the truth-telling mechanism; the distribution of benefits is mainly between consumers and the government. Keywords—land auction; competitive security housing area; mechanism design; truth-telling