A random bidding and supply land use equilibrium model
AbstractA model of the static equilibrium in the real estate market is studied in this paper and a solution algorithm is proposed. Consumers and real estate suppliers are assumed to have idiosyncratic differences, which are described by the discrete choice theory with random-utility and profit-behavior. Consumers are differentiated into clusters by socioeconomic characteristics while suppliers are differentiated by production technology. Consumer behavior is subject to budget constraints (with fixed income), a quasi-linear utility function, and is affected by neighborhood externalities (households) and agglomeration economies (firms). The suppliers' behavior is restrained by zone regulations and affected by scale and scope economies. Total households by cluster are exogenous and total supply fits total demand. Real estate combined with location options is assumed to be discrete and differentiated, then transactions are modeled as auctions. Equilibrium prices are the result of auctions and the market clearing condition. These conditions generate a discontinuous non-linear location equilibrium problem where convexity is obtained by applying the MNL logit in all decisions. The equilibrium is described by a fixed-point equation system that, under some specified conditions, has a unique and stable solution; such conditions are analytically defined and represent a minimum degree of choice dispersion in the model. A fixed-point algorithm is proposed to solve the equilibrium, along with the conditions that assure convergence. This real estate equilibrium model can be applied to the highly complex reality of urban environments at a relatively low computational cost.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Transportation Research Part B: Methodological.
Volume (Year): 41 (2007)
Issue (Month): 6 (July)
Contact details of provider:
Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/548/description#description
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Francisco Martínez & John Roy, 2004. "A model for residential supply," The Annals of Regional Science, Springer, vol. 38(3), pages 531-550, 09.
- D C Simmonds, 1999. "The design of the DELTA land-use modelling package," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 26(5), pages 665-684, September.
- Ellickson, Bryan, 1981. "An alternative test of the hedonic theory of housing markets," Journal of Urban Economics, Elsevier, vol. 9(1), pages 56-79, January.
- Anas, Alex, 1983. "Discrete choice theory, information theory and the multinomial logit and gravity models," Transportation Research Part B: Methodological, Elsevier, vol. 17(1), pages 13-23, February.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.