The Hedonic Price Function in a Matching Model of Housing Market

Lisi, Gaetano (2011): The Hedonic Price Function in a Matching Model of Housing Market.

Abstract

This paper develops a theoretical model in which the matching framework à la Pissarides (2000) extended to the housing market is integrated with the hedonic price theory. Market tightness and selling price collectively determine the long-run equilibrium of the economic system in which a seller can become a buyer, and vice versa. As a result, the house price depends not only on the housing characteristics but also on the market tensions and bargaining power of the parties. This integration allows to overcome a major drawback of the hedonic price theory, namely the assumption of perfect competition.

• Item Type: MPRA Paper
• Language: English
• Keywords: hedonic price theory; housing market; matching models
• Subjects: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R21 - Housing Demand; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets

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