CIRJE-F-593.
Idee, Takako, Shinichiro
Iwata and Teruyuki Taguchi, "Auction Price
Formation with Costly Occupants: Evidence Using Data from the
Foreclosure
properties sold at Japanese judicial auctions are delivered to buyers with an
unclear title when occupants exist, because the foreclosure laws protect
occupants from compulsory execution of auctions. The existence of occupants
theoretically affects the auction price through two channels. First, it affects
the reserve price, and this changes in auction price.
Second, the number of bidders changes in response to changes in the reserve
price that is controlled by occupants, and this changes the auction price.
Using data from the Osaka District Court, we empirically find that the
existence of occupants in properties reduces the auction price through two
channels.