Citation

Discussion Paper Details

Please find the details for DP7639 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Directed Search in the Housing Market

Author(s): James Albrecht, Pieter A. Gautier and Susan Vroman

Publication Date: January 2010

Keyword(s): directed search and housing

Programme Area(s): Labour Economics

Abstract: In this paper, we present a directed search model of the housing market. The pricing mechanism we analyze reflects the way houses are bought and sold in the United States. Our model is consistent with the observation that houses are sometimes sold above, sometimes below and sometimes at the asking price. We consider two versions of our model. In the first version, all sellers have the same reservation value. In the second version, there are two seller types, and type is private information. For both versions, we characterize the equilibrium of the game played by buyers and sellers, and we prove efficiency. Our model offers a new way to look at the housing market from a search-theoretic perspective. In addition, we contribute to the directed search literature by considering a model in which the asking price (i) entails only limited commitment and (ii) has the potential to signal seller type.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7639

Bibliographic Reference

Albrecht, J, Gautier, P and Vroman, S. 2010. 'Directed Search in the Housing Market'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7639