Housing Vacancies, Thin Markets, and Idiosyncratic Tastes

Richard Arnott

Working Paper from Economics Department, Queen's University

Abstract: This paper presents a model with rental housing vacancies in equilibrium. Because of the indivisibility and multi-dimensional heterogeneity of housing units, the market is thin. As a result, a typical household entering the market is willing to pay a premium of its most-preferred over its second most-preferred available (vacant) unit. This confers monopoly power on landlords, which they exploit by setting rents above costs. Free entry and exit force profits to zero, with vacancies as the equilibrating mechanism. Thin markets are modelled by assuming an idiosyncratic component to household's tastes over housing units. The model is extended to treat costly search.

Pages: 38 pages
Date: 1988
References: Add references at CitEc
Citations: View citations in EconPapers (9)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Housing Vacancies, Thin Markets, and Idiosyncratic Tastes (1989)
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:qed:wpaper:722

Access Statistics for this paper

More papers in Working Paper from Economics Department, Queen's University Contact information at EDIRC.
Bibliographic data for series maintained by Mark Babcock ().