Households' willingness to pay for public housing

Jos van Ommeren () and Arno van der Vlist

Journal of Urban Economics, 2016, vol. 92, issue C, 91-105

Abstract: In the presence of price controls, nonmarket housing allocation mechanisms such as queueing prevent households from revealing their marginal willingness to pay for housing through market prices. We derive the households’ marginal willingness to pay using the intuitive idea that the length of the queue for a specific house reflects the households’ willingness to pay for housing characteristics. We apply our methodology to public housing in the Amsterdam Metropolitan area and show that, on average, the households’ marginal willingness to pay for a unit of public housing is close to its marginal costs. This suggests that the welfare loss of public housing through distortions in housing supply is rather limited and is mainly through distortions in housing demand. We provide indirect evidence of the latter by showing that queueing induces inefficient matching of households and housing.

Keywords: Nonmarket allocation; Public housing; Marginal willingness to pay; Queueing (search for similar items in EconPapers)
JEL-codes: R21 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:92:y:2016:i:c:p:91-105

DOI: 10.1016/j.jue.2015.11.007

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