The Hedonic Price Function in a Matching Model of Housing Market

Gaetano Lisi

Economics Bulletin, 2011, vol. 31, issue 3, 2347-2355

Abstract: This paper develops a theoretical model in which the matching framework à la Pissarides (2000) extended to the housing market is integrated with the hedonic price theory. Market tightness and selling price collectively determine the long-run equilibrium of the economic system in which a seller can become a buyer, and vice versa. As a result, the house price depends not only on the housing characteristics but also on the market tensions and bargaining power of the parties. This integration allows to overcome a major drawback of the hedonic price theory, namely the assumption of perfect competition.

Keywords: hedonic price theory; housing market; search and matching models (search for similar items in EconPapers)
JEL-codes: R2 R3 (search for similar items in EconPapers)
Date: 2011-08-21
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Citations: View citations in EconPapers (6)

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Working Paper: The Hedonic Price Function in a Matching Model of Housing Market (2011)
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