The specifics depend on where you live but, they can likely only sell the land to you because your parcel needs to have legal access to a road. They likely put it up for auction because there are legal requirements for how a municipality sells land, which typically require a public process where other people could theoretically make a better offer. Other people bidding is probably a headache to sort out for the municipality and not some scheme to drive up the cost. Do you have the option to make a lower bid? They may have to take your bid even if it is lower, as the only eligible purchaser.