Price competition in the spatial real estate market: Allies or rivals?

Shinichiro Iwata, Kazuto Sumita and Mieko Fujisawa

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines real estate pricing featuring the price response curve, both theoretically and empirically. The Bertrand model with differentiated products suggests that the price response of real estate may differ when properties in the vicinity are priced by an affiliated firm or one's own firm. This is because the firm can maintain the collusive state if real estate prices in the neighborhood are priced by allies, whereas it loses it if prices are priced by rivals. To examine this prediction, a spatial autoregressive model with autoregressive and heteroskedastic disturbances, including a share of allies in the vicinity, is estimated using data on the residential condominium market in central Tokyo. Empirical results provide support for the model prediction.

Keywords: Real estate prices; Strategic pricing; Spatial econometrics (search for similar items in EconPapers)
JEL-codes: C31 D21 D43 L85 R31 (search for similar items in EconPapers)
Date: 2012-03
New Economics Papers: this item is included in nep-com, nep-geo, nep-ind and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Price competition in the spatial real estate market: allies or rivals? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:37438

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