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Discussion Paper Details

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Title: The neighbor is king: Customer discrimination in the housing market

Author(s): Pierre-Philippe Combes, Bruno Decreuse, Benoît Schmutz and Alain Trannoy

Publication Date: September 2012

Keyword(s): Customer Discrimination, Housing Market, Matching Frictions and Neighborhood Externalities

Programme Area(s): International Trade and Regional Economics and Labour Economics

Abstract: This paper provides a method to single out customer-based discrimination in the housing market. We build a matching model with ethnic externalities where landlords differ in the number of housing units they own within the same building. Multiple-dwelling landlords discriminate more often than single-dwelling landlords only if some tenants are prejudiced against the minority group. By testing the null hypothesis whereby minority tenants are equally likely to have a multiple-dwelling landlord, we can test whether there is customer discrimination or not. We run the test on French data and show evidence of customer discrimination in the rental market.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9160

Bibliographic Reference

Combes, P, Decreuse, B, Schmutz, B and Trannoy, A. 2012. 'The neighbor is king: Customer discrimination in the housing market'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9160