IDEAS home Printed from https://ideas.repec.org/a/jre/issued/v23n32002p215-234.html
   My bibliography  Save this article

Pricing Limited Partnerships in the Secondary Market

Author

Listed:
  • Chang N. Xuan

    (Cornell University)

  • Daniel C. Quan

    (China Securities Regulatory Commission, Peoples Republic of China, Beijing 100032)

Abstract

This study investigates the pattern of prices for multiple partnerships sold in the secondary market. In the model, the partnership buyer prefers to purchase the units sequentially since sellers have varying desires to sell. The benefit of a sequential purchase strategy is partially offset by rational sellers who demand higher prices in earlier sales since the possibility of future sales reduces the sellers’ eagerness to sell in earlier rounds. If this strategic component is sufficiently large, a pattern of decreasing prices should be observed. Using a panel dataset comprised of 52,679 transactions from eighteen real estate limited partnerships, and after controlling for performance characteristics, the study finds that prices decrease over time, thus indicating a significant strategic component in this market.

Suggested Citation

  • Chang N. Xuan & Daniel C. Quan, 2002. "Pricing Limited Partnerships in the Secondary Market," Journal of Real Estate Research, American Real Estate Society, vol. 23(3), pages 215-234.
    • Handle: RePEc:jre:issued:v:23:n:3:2002:p:215-234
    as

    Download full text from publisher

    File URL: http://pages.jh.edu/jrer/papers/pdf/past/vol23n03/01.215_234.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-392, June.
    2. Thiel, Stuart E, 1988. "Some Evidence of the Winner's Curse," American Economic Review, American Economic Association, vol. 78(5), pages 884-895, December.
    3. Preston McAfee, R. & McMillan, John, 1988. "Search mechanisms," Journal of Economic Theory, Elsevier, vol. 44(1), pages 99-123, February.
    4. McAfee R. Preston & Vincent Daniel, 1993. "The Declining Price Anomaly," Journal of Economic Theory, Elsevier, vol. 60(1), pages 191-212, June.
    5. Robert J. Weber, 1981. "Multiple-Object Auctions," Discussion Papers 496, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    6. Levin, Dan & Smith, James L, 1991. "Some Evidence on the Winner's Curse: Comment," American Economic Review, American Economic Association, vol. 81(1), pages 370-375, March.
    7. Brad M. Barber, 1996. "Forecasting the Discounts of Market Prices from Appraised Values for Real Estate Limited Partnerships," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(4), pages 471-491, December.
    8. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pitchik, Carolyn, 2009. "Budget-constrained sequential auctions with incomplete information," Games and Economic Behavior, Elsevier, vol. 66(2), pages 928-949, July.
    2. Roberto Burguet, 2000. "Auction theory: a guided tour," Investigaciones Economicas, Fundación SEPI, vol. 24(1), pages 3-50, January.
    3. J. Reiß & Jens Schöndube, 2010. "First-price equilibrium and revenue equivalence in a sequential procurement auction model," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 99-141, April.
    4. Jean-Jacques Laffont, 1998. "Théorie des jeux et économie empirique : le cas des données issues d'enchères," Économie et Prévision, Programme National Persée, vol. 132(1), pages 121-137.
    5. Laffont, Jean-Jacques, 1997. "Game theory and empirical economics: The case of auction data 1," European Economic Review, Elsevier, vol. 41(1), pages 1-35, January.
    6. Boeheim, Rene & Zulehner, Christine, 1996. "Auctions - A Survey," Economics Series 39, Institute for Advanced Studies.
    7. Jeremy Bulow & Paul Klemperer, 2007. "When are Auctions Best?," Economics Papers 2007-W03, Economics Group, Nuffield College, University of Oxford.
    8. Michel Mougeot & Pierre Malgrange, 2002. "Présentation générale," Économie et Prévision, Programme National Persée, vol. 156(5), pages 1-7.
    9. Jeremy Bulow & Paul Klemperer, 2009. "Why Do Sellers (Usually) Prefer Auctions?," American Economic Review, American Economic Association, vol. 99(4), pages 1544-1575, September.
    10. Cramton, Peter C, 1995. "Money Out of Thin Air: The Nationwide Narrowband PCS Auction," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(2), pages 267-343, Summer.
    11. Leonardo Rezende, 2008. "Econometrics of auctions by least squares," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(7), pages 925-948.
    12. Lawrence M. Ausubel & Peter Cramton & Marek Pycia & Marzena Rostek & Marek Weretka, 2014. "Demand Reduction and Inefficiency in Multi-Unit Auctions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(4), pages 1366-1400.
    13. Li, Zhen & Kuo, Ching-Chung, 2011. "Revenue-maximizing Dutch auctions with discrete bid levels," European Journal of Operational Research, Elsevier, vol. 215(3), pages 721-729, December.
    14. Hon-Snir, Shlomit & Monderer, Dov & Sela, Aner, 1998. "A Learning Approach to Auctions," Journal of Economic Theory, Elsevier, vol. 82(1), pages 65-88, September.
    15. Jofre-Bonet, Mireia & Pesendorfer, Martin, 2014. "Optimal sequential auctions," International Journal of Industrial Organization, Elsevier, vol. 33(C), pages 61-71.
    16. Hongjun Zhong, 2002. "postbid market interaction and auction choice," Microeconomics 0210002, University Library of Munich, Germany.
    17. R. Preston McAfee & John McMillan, 1996. "Analyzing the Airwaves Auction," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 159-175, Winter.
    18. Susan Athey & Philip A. Haile, 2006. "Empirical Models of Auctions," NBER Working Papers 12126, National Bureau of Economic Research, Inc.
    19. Menezes, Flavio Marques & Engelbrecht-Wiggans, Richard, 2001. "Why do Bidders Drop Out from a Sequential Auction," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 55(1), January.
    20. John McMillan, 1994. "Selling Spectrum Rights," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 145-162, Summer.

    More about this item

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jre:issued:v:23:n:3:2002:p:215-234. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: JRER Graduate Assistant/Webmaster (email available below). General contact details of provider: http://www.aresnet.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.