Matching Models and Housing Markets: the Role of the Zero-Profit Condition

Gaetano Lisi

Economic Research Guardian, 2013, vol. 3, issue 1, 54-60

Abstract: The recent and growing literature which has extended the use of search and matching models even to the housing market does not use the free entry or zero-profit assumption as a key condition for solving the equilibrium of the model. This is because a straightforward adaptation of the basic matching model to the housing market seems impossible. However, this short paper shows that the zero-profit condition can be easily reformulated to take the distinctive features of the housing market into account. Indeed, the zero-profit condition considers the possibility that a buyer can become a seller and vice versa, since it is used to find the equilibrium of the model where the transition process from seller (buyer) to buyer (seller) comes to an end.

Keywords: Housing Markets; Matching models; Zero-profit (or free-entry) condition (search for similar items in EconPapers)
JEL-codes: J63 R21 R31 (search for similar items in EconPapers)
Date: 2013
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Related works:
Working Paper: Matching models and housing markets: the role of the zero-profit condition (2013)
Working Paper: Matching models and housing markets: the role of the zero-profit condition (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:wei:journl:v:3:y:2013:i:1:p:54-60

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