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The allocative efficiency of construction land quota in rural China: a perspective of bidders’ behavior and regret psychology

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Abstract

The construction land quota pricing mechanism with cost plus pricing method is not sufficient to reflect its intrinsic value. This diminishes the willingness of farmers to voluntarily reclaim abandoned residential and other rural construction land, leading to suboptimal efficiency in rural land utilization and an excessive squandering of rural land resources. Thus, a sequential auction model with two stages for complementary goods was constructed, which considered the synergic characteristics between the land and quota. Further, regret psychology of bidder was considered in the case of winning or losing. A rational pricing mechanism has been developed to allocate construction land quotas, aiming to enhance farmers’ motivation to the vacant homesteads of reclamation and revitalizing the stock of rural construction land. The results revealed that the regret psychology in the case of winning would decrease the transaction price of the quota, i.e., the greater the perceived regret in the case of winning, the more significant the reduction in the bidding price offered. Moreover, the regret psychology in the event of losing/failure would increase the transaction price of quota. Furthermore, publishing only the winner’s price after the auction leads to the highest price of the quota offered by the bidder. In contrast, publishing only the loser’s bidding price leads to the lowest transaction price of the quota offered by the bidder. In addition, the fee for delayed construction would increase the bidding price of the construction land quota. Therefore, local governments should consider announcing only the winner of price after the quota auction has ended. In addition, imposing a fee for delayed construction would enhance the transaction price of land quota, increase farmers’ revenue from land reclamation, and incentivize farmers to reclaim unused rural land.

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Funding

This research is supported by the Humanities and Social Science project of Chongqing Education Commission (No. 22SKGH123), the National Natural Science Foundation of China (No. 71573025), Fundamental Research Funds for the Central Universities (No. 2020CDJSK02PT12), the Natural Science Foundation of Chongqing (No. cstc2019jcyj-msxmX0616), and the Doctoral Project Foundation of Chongqing Normal University (No. 21XWB040).

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Authors and Affiliations

  1. School of Economics and Management, Chongqing Normal University, Chongqing, China

    Jingyu Liu & Yuyu Li

  2. School of Economics and Business Administration, Chongqing University, Chongqing, China

    Weidong Meng & Bo Huang

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  1. Jingyu Liu
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  2. Weidong Meng
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Contributions

Jingyu Liu: mathematical modeling, data analysis, software, and writing—original draft preparation; Weidong Meng and Bo Huang: conceptualization, methodology and writing—original draft preparation. Bo Huang: writing—original draft preparation and visualization; Jingyu Liu and Weidong Meng: writing—original draft preparation; Weidong Meng, Bo Huang and Yuyu Li: supervision, writing—review and editing. All authors of this paper have directly participated in this study’s writing, editing, and planning.

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Correspondence to Bo Huang.

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Liu, J., Meng, W., Li, Y. et al. The allocative efficiency of construction land quota in rural China: a perspective of bidders’ behavior and regret psychology. Environ Sci Pollut Res 31, 11968–11982 (2024). https://doi.org/10.1007/s11356-024-31873-6

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