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COMMUNITY PROPERTY AUCTION, NASH BIDDING RULE AND CHINA'S RURAL ECONOMIC REFORM
Author(s) -
Li Ke,
Yao Shuntian,
Yu Lei
Publication year - 2009
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2009.00474.x
Subject(s) - bidding , economics , china , microeconomics , common value auction , revenue equivalence , property rights , auction theory , economic efficiency , equity (law) , political science , law
In this paper we present a model based on the auction theory for community properties and its possible application to China's economic reforms. We derive the Nash bidding rule for the first price sealed‐bid auction of a community‐owned object, and compare it with the bidding rule for auctions of a privately‐owned object. Moreover, we argue that in the process of China's economic reforms, auctioning off the community‐owned properties to private owners is the optimal way to achieve economic efficiency together with social equity. This paper has obvious implications for China's reforms relating to commercializing its rural land and other community property.