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Transferring ownership of public housing to existing tenants: A mechanism design approach

Tommy Andersson, Lars Ehlers and Lars-Gunnar Svensson

No SP II 2015-207, Discussion Papers, Research Unit: Market Behavior from WZB Berlin Social Science Center

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 tradeoff between achieving the goals of the legislation and allocating the houses efficiently. This paper investigates this specific tradeoff 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)
New Economics Papers: this item is included in nep-gth and nep-ure
Date: 2015
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https://www.econstor.eu/bitstream/10419/118617/1/83486133X.pdf (application/pdf)

Related works:
Working Paper: Transferring Ownership of Public Housing to Existing Tenants: A Mechanism Design Approach (2014) Downloads
Working Paper: Transferring Ownership of Public Housing to Existing Tenants: A Mechanism Design Approach (2014) Downloads
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