Tenancy Default, Excess Demand and the Rental Market
Katherine Cuff Nicolas Marceau
Authors registered in the RePEc Author Service: Katherine Cuff () and
Nicolas Marceau ()
Department of Economics Working Papers from McMaster University
We develop a model of a competitive rental housing market with an endogenous rate of tenancy default arising from income uncertainty. Potential tenants must choose to engage in a costly search for rental housing, and must commit to a rental agreement before the uncertainty is resolved. We show that there are two possible equilibria in this market: a market-clearing equilibrium and an equilibrium with excess demand. Therefore, individuals might not have access to rental housing because they are unable to afford to look for housing, they are unable to pay their rent, or with excess demand in the market they are simply unable to find a rental unit. We show that government regulations affecting the cost of default to the housing suppliers and the quality of rental units can have different effects on the equilibrium variables of interest — rental rate, quantity demanded and supplied, and access to rental housing — depending on the type of equilibria in the market. A numerical example illustrates these results.
Keywords: Tenancy Default; Excess Demand; Rental Housing Policies (search for similar items in EconPapers)
JEL-codes: R21 R31 R38 D41 (search for similar items in EconPapers)
Pages: 32 pages
New Economics Papers: this item is included in nep-bec, nep-mic and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2007-08
Access Statistics for this paper
More papers in Department of Economics Working Papers from McMaster University Contact information at EDIRC.
Bibliographic data for series maintained by ().