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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.

Suggested Citation

  • André de Palma & Nathalie Picard & Paul Waddell, 2007. "Discrete choice models with capacity constraints: an empirical analysis of the housing market of the greater Paris region," THEMA Working Papers 2007-04, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  • Handle: RePEc:ema:worpap:2007-04
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    References listed on IDEAS

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    1. de Palma, Andre & Rouwendal, Jan, 1996. "Availability Constraints in the Housing Market," Journal of Housing Economics, Elsevier, vol. 5(2), pages 105-132, June.
    2. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
    3. 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.
    4. 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.
    5. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-890, July.
    6. 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.
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    Citations

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    Cited by:

    1. Bhat, Chandra R., 2015. "A comprehensive dwelling unit choice model accommodating psychological constructs within a search strategy for consideration set formation," Transportation Research Part B: Methodological, Elsevier, vol. 79(C), pages 161-188.
    2. Michel Beine & Marco Delogu & Lionel Ragot, 2017. "Understanding the Impact of Tuition Fees in Foreign Education: the Case of the UK," CREA Discussion Paper Series 17-15, Center for Research in Economic Analysis, University of Luxembourg.
    3. 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.
    4. 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.
    5. De Palma, Andre & Motamedi, Kiarash & Picard, Nathalie & Waddell, Paul, 2007. "Accessibility and environmental quality: inequality in the Paris housing market," European Transport \ Trasporti Europei, ISTIEE, Institute for the Study of Transport within the European Economic Integration, issue 36, pages 47-74.
    6. Lionel Ragot & Michel Beine & Marco Delogu, 2017. "The Role of Fees in Foreign Education: Evidence From Italy," EconomiX Working Papers 2017-44, University of Paris Nanterre, EconomiX.
    7. Felsenstein, Daniel & Ashbel, Eyal, 2010. "Simultaneous modeling of developer behavior and land prices in UrbanSim," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 3(2), pages 107-127.
    8. André De Palma & Soumyanetra Munshi, 2012. "Multi-player, Multi-prize, Imperfectly Discriminating Contests," Working Papers hal-00683688, HAL.
    9. André De Palma & Alexandre Guimard, 2014. "Urbanism, an overview," Working Papers hal-00969574, HAL.
    10. Michel Beine & Marco Delogu & Lionel Ragot, 2017. "The Role of Fees in Foreign Education: Evidence From Italy and the United Kingdom," Working Papers 2017-04, CEPII research center.
    11. Juan Carlos Espinoza Garcia & Laurent Alfandari, 2015. "Robust location of new housing developments using a choice model," Working Papers hal-01230621, HAL.
    12. 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.
    13. Clifton, Kelly J. & Singleton, Patrick A. & Muhs, Christopher D. & Schneider, Robert J., 2016. "Development of destination choice models for pedestrian travel," Transportation Research Part A: Policy and Practice, Elsevier, vol. 94(C), pages 255-265.
    14. Elgar, Ilan & Farooq, Bilal & Miller, Eric J., 2015. "Simulations of firm location decisions: Replicating office location choices in the Greater Toronto Area," Journal of choice modelling, Elsevier, vol. 17(C), pages 39-51.
    15. André De Palma & Karim Kilani, 2012. "Lower-order logsums," Working Papers hal-00690299, HAL.
    16. Schirmer, Patrick & van Eggermond, Michael & Axhausen, Kay, 2014. "The role of location in residential location choice models: a review of literature," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 7(2), pages 3-21.
    17. Espinoza Garcia, Juan Carlos & Alfandari, Laurent, 2015. "Robust location of new housing developments using a choice model," ESSEC Working Papers WP1521, ESSEC Research Center, ESSEC Business School.

    More about this item

    Keywords

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

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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