The traditional theory of urban land markets assumes perfect contestability - the absolute freedom of market entry - that compels developers to bid up the land rent to equal the economic profit from land use. This assumption, however, is untested empirically due to the difficulties in measuring...

The extent to which the developers are able to earn economic profits on their land acquisitions reflects the competition in the land market. We apply event study analysis to government land auctions in Hong Kong to detect such economic profits. When the auction price of a site falls short of its...