Tacit collusion in housing markets: the case of Santiago, Chile

Miguel Vargas ()

Applied Economics, 2016, vol. 48, issue 54, 5257-5275

Abstract: In this article, using a detailed micro-database from Santiago, Chile, the potential existence of tacit collusion in housing markets is investigated. In order to perform the test, Santiago’s housing market is split into four different submarkets using hedonic price analysis and household’s socioeconomics characteristics. Then, using a GMM panel data model, regressions are run for each submarket, correlating industry’s markups with the aggregate level of activity. The main finding is that low and middle income submarkets present higher average markups and a pro-cyclical behaviour. This finding is consistent with a market where participants do not face capacity constraints and behave strategically to sustain tacit collusion during increasing demand periods.

Date: 2016
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DOI: 10.1080/00036846.2016.1176111

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