Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Published in:
Bilevel Models on the Competitive Facility Location Problem Read chapter Read first chapter

2017 | OriginalPaper | Chapter

An Equilibrium-Econometric Analysis of Rental Housing Markets with Indivisibilities

Authors : Mamoru Kaneko, Tamon Ito

Published in: Spatial Interaction Models

Publisher: Springer International Publishing

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

We develop a theory of an equilibrium-econometric analysis of rental housing markets with indivisibilities. It provides a bridge between a (competitive) market equilibrium theory and a statistical/econometric analysis. The listing service of apartments provides the information to both economic agents and an econometric analyzer: each economic agent uses a small part of the data from the service for his economic behavior, and the analyzer uses them to estimate the market structure. It is argued that the latter may be done by assuming that the economic agents take the standard price-taking behavior. We apply our theory to the data in the rental housing markets in the Tokyo area, and examine the law of diminishing marginal utility for household. It holds strictly with respect to the consumption, less with commuting time-distance, and much less with the sizes of apartments.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Technik"

Online-Abonnement

Mit Springer Professional "Technik" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 390 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Maschinenbau + Werkstoffe




 

Jetzt Wissensvorsprung sichern!

inform now
previous chapter A Game Theoretic Approach to an Emergency Units Location Problem
next chapter Large Spatial Competition
Appendix
Available only for authorised users
Footnotes
1
In the city of Tokyo (about 12 millions of residents), the percentage of households renting apartments is about 55% in 2005, and in the entire Japan, the percentage is about 37%.
 
2
There are many decentralized real estate agents. In our analysis, we do not explicitly count real-estate companies. But we should remember that behind the market description, many real-estate companies are included.
 
3
See van der Laan et al. [17] and its references for recent papers for the literature of assignment markets, and see Arnott [2] for a recent survey on the urban economics literature from Alonso [1].
 
4
The cost functions here should not be interpreted as measuring costs for building new apartments. In our rental housing market, the apartment units are already built and fixed. Therefore, C j (y j ) is the valuation of apartment units y j below which he is not willing to rent y j unit for the contract period. This will be clearer in the numerical example in Sect. 2.2.
 
5
At this stage, the result is not sensitive with the uniform distribution assumption, i.e., if we change it to a truncated normal distribution, the calculated rents are not much changed. However, in the later calculation in Sect. 5, a change of this assumption seems to affect the result.
 
6
Incidentally, in the present context, the coefficient of determination is defined as \(\sum _{k=1}^{T}\left \vert D_{k}^{o}\right \vert (\overline{P}_{k}^{o}(\omega ) -\overline{\overline{P}}^{o}(\omega ))^{2}/T_{V }(P_{D}^{o}(\omega ),\overline{\overline{P}}^{o}(\omega )),\) where \(\overline{\overline{P}}^{o}(\omega )\) is the entire average of P D o . It indicates how much the systematic factors explain the observed rental prices. In the above example, the coefficient is approximately 0. 757. 
 
7
One possible amendment of our estimation is to change the assumption on the income distribution. We have assumed that the incomes are distributed from the lowest I 8957 to the highest I 1. The above computation result seems to be quite sensitive by changing these lowest and highest income levels. Hence, it could give a better result if we replace the assumption of a uniform distribution by the data available from the other source. This is an open problem.
 
8
The reader may recall the Debreu-Mandel-Sonnenshein Theorem in general equilibrium theory (see Mas-Colell et al. [12]) stating that any demand function with a certain required condition is derived from some economic model. It describes the equivalence between the set of demand curves and the set of economic models. In this sense, it gives an important implication to the theory of general equilibrium theory.
 
9
This is regarded as a linear hedonic price model.
 
10
In fact, “maximum” can be dropped in here in the sense that each \(\mathbb{E}\) has a unique competitive rent vector.
 
Literature
1.
Alonso, W.: Location and Land Use. Harvard University Press, Cambridge (1964)CrossRef
2.
Arnott, R.: Economic theory and housing. In: Mills, E.S. (ed.) Handbook of Regional and Urban Economics, vol. 2. North-Holland, Amsterdam (1991)
3.
Epple, D.: Hedonic prices and implicit markets: estimating demand and supply functions for differentiated products. J. Polit. Econ. 95, 58–80 (1987)CrossRef
4.
5.
Hicks, J.: Value and Capital. Carendon Press, Oxford (1939)
6.
Ito, T.: Effects of quality changes in rental housing markets with indivisibilities. Reg. Sci. Urban Econ. 37, 602–617 (2007)CrossRef
7.
8.
9.
10.
Kaneko, M., Ito, T., Osawa, Y.-I.: Duality in comparative statics in rental housing markets with indivisibilities. J. Urban Econ. 59, 142–170 (2006)CrossRef
11.
Kanemoto, Y., Nakamura, R.: A new approach to the estimation of structural equations in hedonic models. J. Urban Econ. 19, 218–233 (1986)CrossRef
12.
Mas-Colell, A., Whinston, M.D., Green, J.R.: Microeconomic Theory. Oxford University Press, New York (1995)MATH
13.
Miyake, M.: Comparative statics of assignment markets with general utilities. J. Math. Econ. 23, 519–531 (1994)CrossRefMATH
14.
Ricardo, D.: The Principles of Political Economy and Taxation. J. M. Dent and Sons, London (1965, 1817: original)
15.
16.
17.
van der Laan, G., Talman, D., Yang, Z.: Existence and welfare properties of equilibrium in an exchange economies with multiple divisible and indivisible commodities and linear production. J. Econ. Theory 103, 411–428 (2002)CrossRefMATH
18.
19.
von Böhm-Bawerk, E.: Positive Theory of Capital (translated by W. Smart, (Original publication in 1891)). Books for Libraries, New York (1921)
20.
von Neumann, J., Morgenstern, O.: Theory of Games and Economic Behavior. Princeton University Press, Princeton (1944)MATH
21.
Wooldridge, J.M.: Introductory Econometrics: Modern Approach. South-Western College Publishing, Cincinnati (2000)
Metadata
Title
An Equilibrium-Econometric Analysis of Rental Housing Markets with Indivisibilities
Authors
Mamoru Kaneko
Tamon Ito
Copyright Year
2017
Book
Spatial Interaction Models

Print ISBN: 978-3-319-52653-9

Electronic ISBN: 978-3-319-52654-6

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-3-319-52654-6_9

Premium Partner

    Image Credits