Bid Values and their Role in Land Development Over Time and Under Uncertainty
- Authors
- BATABYAL, A.; YOO, SEUNG JICK
- Issue Date
- Oct-2003
- Publisher
- The Japan Section of the Regional Science Association International
- Citation
- Studies in Regional Science, v.33, no.1, pp 229 - 236
- Pages
- 8
- Journal Title
- Studies in Regional Science
- Volume
- 33
- Number
- 1
- Start Page
- 229
- End Page
- 236
- URI
- https://scholarworks.sookmyung.ac.kr/handle/2020.sw.sookmyung/149093
- DOI
- 10.2457/srs.33.229
- ISSN
- 0287-6256
1880-6465
- Abstract
- Recently, Batabyal (2000) has demonstrated that when the land development question is studied in an intertemporal and random setting, it is possible that a landowner will never develop (always preserve) his or her land. This result arises because the landowner in Batabyal (2000) maximizes the likelihood of accepting the best possible bid of development. What happens when a landowner employs the following decision rule: Develop land as long as the dollar value of a bid
exceeds a stochastic reservation level of revenue? In this paper, we provide an interesting answer to this question. First, we establish that the likelihood of developing land with this decision rule is always positive. Even so, we point out that on average, a landowner who uses this decision rule will always
end up preserving his or her land.
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