Quantity Premia in Real Property Markets
In this paper, a theory of nonlinear pricing is tested using 1993 land market data in residential districts of the Osaka metropolitan area. It is shown that quantity premia prevail in real property markets, i.e., larger lots are proportionately more expensive. This is due to irreversibility in changing lot size and an oligopolistic market structure with nondecreasing marginal utility of lot size.
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