Location Differentiation of Housing Market In The Presence of A Unanimous Characteristic

Bong-Ju Kim and Seung-Nyeon Kim
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Bong-Ju Kim: National Assembly Budget Office
Seung-Nyeon Kim: Hankuk University of Foreign Studies

Korean Economic Review, 2007, vol. 23, 353-377

Abstract: This paper examines how the presence of a unanimous characteristic affects housing locations. An example of the unanimous characteristic, considered in the paper, is the regional educational environment. Our findings are as follows. First, if the relative attraction of the unanimous characteristic is over a critical threshold, maximal differentiation no longer holds. Second, as the transportation cost is lowered, agglomeration forces are intensified-both in social optimum and competitive outcome. Third, since allowing competitive suppliers to determine their locations results in suboptimal outcomes, the government may need to intervene with a subsidy-tax scheme. However, the marginal benefit of the government intervention would decrease with improvement in transportation system.

Keywords: Unanimous Characteristic; Location Differentiation; Transportation Cost (search for similar items in EconPapers)
JEL-codes: D21 R11 (search for similar items in EconPapers)
Date: 2007
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