Dynamic Model for the Simulation of Equilibrium Status in the Land Use Market
This paper presents a dynamic equilibrium model for the real estate market. Households have stochastic behavior and compete for quasi-unique locations (real estate goods), which are assigned to the best bidder through an auction-type mechanism. The producers are modeled as maximizers of their profits over the long-term through the production of real estate assets, represented by the present value of future sales. It is assumed that the producers do not possess complete information about future levels of demand or prices. Rather, it is assumed that producers are myopic, meaning that they take the actual and historic prices in each period as the relevant information for their decision-making. A notion of equilibrium is used that adjusts prices given two situations: supply and demand surplus. In the supply surplus case, the prices are diminished and supply in the market is reduced until supply equals demand. In the case of demand surplus, the prices rise and demand diminishes (homeless households) until demand equals supply. This equilibrium condition yields prices that are jumpy over time, resembling observations of inventories in the real estate market and the manufacture industry. Copyright Springer Science + Business Media, LLC 2006
Volume (Year): 6 (2006)
Issue (Month): 1 (March)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/regional+science/journal/11067/PS2|
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.:
When requesting a correction, please mention this item's handle: RePEc:kap:netspa:v:6:y:2006:i:1:p:55-73. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
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.