Transferring Ownership of Public Housing to Existing Tenants: A Mechanism Design Approach

Tommy Andersson, Lars Ehlers and Lars-Gunnar Svensson

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: This paper explores situations where tenants in public houses, in a specific neighborhood, are given the legislated right to buy the houses they live in or can choose to remain in their houses and pay the regulated rent. This type of legislation has been passed in many European countries in the last 30-35 years (the U.K. Housing Act 1980 is a leading example). The main objective with this type of legislation is to transfer the ownership of the houses from the public authority to the tenants. To achieve this goal, selling prices of the public houses are typically heavily subsidized. The legislating body then faces a trade-off between achieving the goals of the legislation and allocating the houses efficiently. This paper investigates this specific trade-off and identifies an allocation rule that is individually rational, equilibrium selecting, and group non-manipulable in a restricted preference domain that contains "almost all" preference profiles. In this restricted domain, the identified rule is the equilibrium selecting rule that transfers the maximum number of ownerships from the public authority to the tenants. This rule is preferred to the current U.K. system by both the existing tenants and the public authority. Finally, a dynamic process for finding the outcome of the identified rule, in a finite number of steps, is provided.

Keywords: public housing; existing tenants; equilibrium; minimum equilibrium prices; maximum trade; group non-manipulability; dynamic price process (search for similar items in EconPapers)
JEL-codes: C71 C78 D71 D78 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014
New Economics Papers: this item is included in nep-gth and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Transferring ownership of public housing to existing tenants: A mechanism design approach (2015)
Working Paper: Transferring Ownership of Public Housing to Existing Tenants: A Mechanism Design Approach (2014)
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