Microeconomic models of housing markets (Q761328)

This volume is a survey of four general equilibrium models of the housing market. Three of these (Kain and Apgar, Behring and Goldrian, Wegener) are empirical models devised as simulation tools for particular housing markets over time. The remaining model (Wiesmeth) is theoretical. The first empirical model (Kain and Apgar) gives a very disaggregate description of the demand and supply sectors, and defines equilibrium by a market-clearing condition: prices are assumed to be flexible, and the possibility of rationing is not considered. The equilibrium conditions are solved by means of a linear programming assignment algorithm. In the two remaining empirical models (Behring and Goldrian, Wegener), prices are rigid in the short run, flexible in the long run. Behring and Goldrian describe the market interactions as a Markov process. The transition probabilities are estimated by logit analysis. Wegener simulates housing searches by households with Monte-Carlo methods. The analytical model presented by Wiesmeth is characterized by price rigidities and quantity rationing, in the spirit of Benassy, Drèze et Malinvaud. A large part of the paper is devoted to the analysis of various types of rationing that can be observed in an equilibrium of such a market. The editor of the volume presents an introductory description of the characteristics of housing markets, as well as an excellent synthesis of the four models.