The Measurement of Spatial Competition: Evidence from the Real Estate Market

Ralph Siebert and Xiaoyan Zhou

No 11380, CESifo Working Paper Series from CESifo

Abstract: This study provides a test for measurement of spatial competition in residential real estate markets. Several alternative spatial competition measures are tested. We employ a Bertrand oligopoly model with differentiated products and adopt a Spatial Autoregressive model using a two stage least squares estimator. Our results show that commonly used count-based measures using the number of competitors in specific geographic radii are outperformed by price-based measures using prices of nearest competing neighbors. The main reason is that the latter measure accounts for heterogeneous neighborhood density of competitors. The measure captures the decaying pattern of spatial price competition over distance. The measure also stands out in capturing het-erogeneous spatial price competition effects. We find that spatial price competition is more intense among high-value homes within the five nearest competing houses.

Keywords: price effects; real estate market; spatial competition; spatial econometrics; spatial markets (search for similar items in EconPapers)
JEL-codes: D40 R10 R30 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-com, nep-geo, nep-ind and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp11380.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11380

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().