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Procedural Formalism and Social Networks in the Housing Market

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  • Antoine Bonleu

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales)

Abstract

Why do some OECD countries have high levels of procedural formalism (PF) in the housing market? We provide an explanation based upon complementarities between the strength of social networks and the stringency of procedural formalism. The interest of social networks is that conflict resolution is independent of the law. When local people belong to social networks whereas foreigners do not, PF may facilitate housing search for locals at the expense of foreigners. To illustrate this mechanism we build a search-theoretic model of the housing market. The model emphasizes that the support for PF increases with the size of social networks, the default probability on the rent, the proportion of foreigners, and market tightness.

Suggested Citation

  • Antoine Bonleu, 2014. "Procedural Formalism and Social Networks in the Housing Market," Working Papers halshs-01178230, HAL.
  • Handle: RePEc:hal:wpaper:halshs-01178230
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01178230
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    References listed on IDEAS

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    Cited by:

    1. Pacillo, Grazia, 2016. "Market participation, innovation adoption and poverty in rural Ghana," Economics PhD Theses 0916, Department of Economics, University of Sussex.
    2. Antoine Bonleu, 2017. "Sun, Regulation and Local Social Networks," Working Papers halshs-01502604, HAL.

    More about this item

    Keywords

    housing market regulation; search and matching;

    JEL classification:

    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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