Abstract:
By relaxing the assumption of symmetric developers in urban land development, this research examines the loss or gain of the aggregate surplus of land development when land lease contracts are sold in a first price auction with asymmetric developers. Asymmetric developers introduce asymmetric bid-rent functions. This research also identifies asymmetric land value functions by taking into account developers with different marginal costs. The estimable model derived from the theoretical framework by applying hedonic theory directs the empirical tests of asymmetry. The empirical results suggest the existence of developers? asymmetry. Developers? asymmetry is found to be significant in the land price test. The findings of this research suggest the reconsideration of the urban spatial structure analyses by applying asymmetric bid-rent functions. The theoretical and empirical findings may also resolve the problem of ?non-zero? errors observed in land price tests of existing literature. The efficiency of land sales mechanisms is also suggested to be further examined when developers are asymmetric in the real estate development market.
