Recently, a collaborative paper titled Extrapolative Households and Strategic Firms: Evidence from China's Land and Housing Market, co-authored by Associate Researcher Song Yan from the School of Economics, was officially published in Volume 153, 2026, of Journal of Urban Economics, a top international journal in urban economics. From the perspective of households’ cross-market extrapolative expectations and developers’ strategic bidding behavior, this study provides empirical evidence on how land auctions affect housing market performance. Song Yan is the co-first author of the paper, with collaborators including Liu Zhe from the School of Economics at Beijing Wuzi University, Professor Shi Wei from the Institute of Economic and Social Research at Jinan University, and Professor Sun Weizeng from the Joint Research Institute at Nanjing Audit University.

The research finds that high-premium land auctions can significantly push up transaction prices and volumes of nearby housing. Moreover, developers with existing land reserves near the auctioned plots strategically pay higher premiums. The core mechanism is that developers send signals of rising housing prices to homebuyers by driving up land prices, activating their extrapolative expectations, and thus increasing the value of their unsold housing stock, forming a "cross-subsidy" effect. This paper is one of the phased achievements of the team’s series of research on the operational mechanisms of China’s land and housing markets.

The linkage between land and housing markets is a core issue for understanding China’s urban economic operation and real estate macro-regulation. Based on multi-source microdata—including approximately 56,000 land auction records, 700,000 second-hand housing transaction data entries, and 600,000 new commercial housing sales data entries across 35 Chinese cities from 2008 to 2017—this paper constructs an event-study DID model leveraging the exogeneity of land auction timing. It systematically examines the impact of land auction premiums on nearby housing prices, transaction volumes, and household expectations, and further analyzes developers’ strategic behavior in land bidding and its underlying mechanisms. The results show that a one-standard-deviation increase in land auction premiums leads to a significant 1.7% rise in housing transaction prices within a 3-kilometer radius compared to the 3–5 kilometer range. Prices and transaction volumes of new commercial housing rise simultaneously with strong temporal persistence. These effects are particularly prominent during real estate market upswings but weaken notably during downturns. Mechanism tests confirm that Baidu Search Index and housing price expectation survey data verify that households significantly revise up their expectations of future housing prices after observing high-premium auctions, forming the micro-foundation for developers’ strategic behavior. Further research reveals that developers holding land or unsold housing within 3 kilometers of the auctioned plots pay an average premium of 3.9%–5.72% more in bidding, driven mainly by the "unsold stock" channel, unrelated to alternative explanations such as corporate financing capacity, private information advantages, or economies of scale. A quasi-natural experiment based on the implementation of the "price cap, land premium competition" policy further shows that developers’ strategic premium behavior largely disappears when future housing prices are exogenously constrained, providing robust causal evidence for the "cross-subsidy" mechanism.

Song Yan is an associate researcher and master’s supervisor at the School of Economics, Shandong University. He earned his PhD in Economics from McGill University in Canada and previously served as an assistant professor at the Institute of Economic and Social Research at Jinan University. His research focuses on labor economics, education economics, and health economics. His research findings have been published in international authoritative economic journals such as Journal of Urban Economics, Journal of Economic Behavior & Organization, Economics of Education Review, and Health Economics. He has presided over multiple national and provincial research projects, including a National Natural Science Foundation General Project and a Shandong Natural Science Foundation Youth Project.