Deflation in Durable Goods Markets: An Empirical Model of the Tokyo Condominium Market

Migiwa Tanaka

No 08-E-02, IMES Discussion Paper Series from Institute for Monetary and Economic Studies, Bank of Japan

Abstract: Throughout the 1990s, the supply of new condominiums in Tokyo significantly increased while prices persistently fell. This paper investigates whether the market power of condominium developers is a factor in explaining the outcome in this market and whether there is a relationship between production cost trend and the degree of market power that the developers were able to exercise. In order to respond to these questions, a dynamic durable goods oligopoly model of the condominium market-one incorporating time-variant costs and a secondary market-is constructed and structurally estimated using a nested GMM procedure.

Keywords: Durable Goods; Dynamic Oligopoly; Housing Market (search for similar items in EconPapers)
JEL-codes: L11 L13 R31 (search for similar items in EconPapers)
Date: 2008-02
New Economics Papers: this item is included in nep-com and nep-ure
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