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Discrete choice models with capacity constraints: an empirical analysis of the housing market of the greater Paris region

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  • André de Palma

    ()
    (University of Cergy-Pontoise, THEMA, France and Ecole Nationale des Ponts et Chaussées, France. Member of the Institut universitaire de France)

  • Nathalie Picard

    ()
    (University of Cergy-Pontoise, THEMA, France and INED)

  • Paul Waddell

    ()
    (University of Washington at Seattle, Department of Urban Design and Planning)

Abstract

Discrete choice models are based on the idea that each user can choose both freely and independently from other users in a given set of alternatives. But this is not the case in several situations. In particular, limitations and interactions can occur when the number of available products of one type is smaller than the total demand for this type. As a consequence, some individuals can be denied their preferred choice. We develop a methodology to address those constraints and we apply it to residential location choice, where our empirical data suggest that availability constraints may bias actual choices. The analysis provides some theoretical developments and elaborates an iterative procedure for estimating demand in the presence of capacity constraints. The empirical application relies on the location choice model developed and estimated in [6] for Ile de France (Paris region) and generalizes it to integrate capacity constraints.

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Bibliographic Info

Paper provided by THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise in its series THEMA Working Papers with number 2007-04.

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Date of creation: 2007
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Handle: RePEc:ema:worpap:2007-04

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Keywords: Residential location; constrained Logit; capacity constraints; sampling; Ilede- France;

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  1. A. de Palma & J. Rouwendal, 1996. "Availability constraints in the housing market," THEMA Working Papers 96-04, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  2. de Palma, Andre & Motamedi, Kiarash & Picard, Nathalie & Waddell, Paul, 2005. "A model of residential location choice with endogenous housing prices and traffic for the Paris region," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 31, pages 67-82.
  3. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July.
  4. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
  5. Jordan Louviere & Kenneth Train & Moshe Ben-Akiva & Chandra Bhat & David Brownstone & Trudy Cameron & Richard Carson & J. Deshazo & Denzil Fiebig & William Greene & David Hensher & Donald Waldman, 2005. "Recent Progress on Endogeneity in Choice Modeling," Marketing Letters, Springer, vol. 16(3), pages 255-265, December.
  6. John M. Quigley, 1976. "Housing Demand in the Short Run: An Analysis of Polytomous Choice," NBER Chapters, in: Explorations in Economic Research, Volume 3, number 1, pages 76-102 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. André De Palma & Alexandre Guimard, 2014. "Urbanism, an overview," Working Papers hal-00969574, HAL.
  2. André De Palma & Soumyanetra Munshi, 2012. "Multi-player, Multi-prize, Imperfectly Discriminating Contests," Working Papers hal-00683688, HAL.
  3. André De Palma & Karim Kilani, 2012. "Lower-order logsums," Working Papers hal-00690299, HAL.
  4. Marko Kryvobokov & Aurélie Mercier & Alain Bonnafous & Dominique Bouf, 2013. "Simulating housing prices with UrbanSim: predictive capacity and sensitivity analysis," Letters in Spatial and Resource Sciences, Springer, vol. 6(1), pages 31-44, March.
  5. de Palma, Andre & Motamedi, Kiarash & Picard, Nathalie & Waddell, Paul, 2005. "A model of residential location choice with endogenous housing prices and traffic for the Paris region," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 31, pages 67-82.
  6. André de Palma & Kiarash Motamedi & Nathalie Picard & Paul Waddell, 2007. "Accessibility and Environmental Quality: Inequality in the Paris Housing Market," THEMA Working Papers 2007-16, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  7. Amnon Frenkel & Edward Benedit & Sigal Kaplan, 2011. "Residential choice of knowledge-workers in a 'startup metropolis': the role of amenities, workplace and lifestyle," ERSA conference papers ersa11p208, European Regional Science Association.

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