IDEAS home Printed from https://ideas.repec.org/a/bla/reesec/v49y2021is1p74-110.html
   My bibliography  Save this article

Information Asymmetry, Regulations and Equilibrium Outcomes: Theory and Evidence from the Housing Rental Market

Author

Listed:
  • Brent W. Ambrose
  • Moussa Diop

Abstract

We explore the role of information asymmetry and regulations on equilibrium outcomes in rental markets to show that while landlords price the cost of regulations into rent, they also invest in tenant screening to alleviate information asymmetry, thus restricting access to rental housing. We are the first to document this additional tenant screening in response to regulations.

Suggested Citation

  • Brent W. Ambrose & Moussa Diop, 2021. "Information Asymmetry, Regulations and Equilibrium Outcomes: Theory and Evidence from the Housing Rental Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S1), pages 74-110, March.
    • Handle: RePEc:bla:reesec:v:49:y:2021:i:s1:p:74-110
    DOI: 10.1111/1540-6229.12262
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1540-6229.12262
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1540-6229.12262?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Randal Verbrugge & Alan Dorfman & William Johnson & Fred Marsh III & Robert Poole & Owen Shoemaker, 2017. "Determinants of Differential Rent Changes: Mean Reversion versus the Usual Suspects," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(3), pages 591-627, July.
    2. Eli Beracha & Ben T Gilbert & Tyler Kjorstad & Kiplan Womack, 2018. "On the Relation between Local Amenities and House Price Dynamics," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 46(3), pages 612-654, September.
    3. Philippe Bracke, 2015. "House Prices and Rents: Microevidence from a Matched Data Set in Central London," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 403-431, June.
    4. Glaeser, Edward L & Gyourko, Joseph & Saks, Raven, 2005. "Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 331-369, October.
    5. Henderson, J Vernon & Ioannides, Yannis M, 1983. "A Model of Housing Tenure Choice," American Economic Review, American Economic Association, vol. 73(1), pages 98-113, March.
    6. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    7. Ambrose, Brent W. & Diop, Moussa, 2014. "Spillover effects of subprime mortgage originations: The effects of single-family mortgage credit expansion on the multifamily rental market," Journal of Urban Economics, Elsevier, vol. 81(C), pages 114-135.
    8. Jenny Schuetz, 2009. "No renters in my suburban backyard: Land use regulation and rental housing," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 28(2), pages 296-320.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Agarwal, Sumit & Ambrose, Brent W. & Diop, Moussa, 2022. "Minimum wage increases and eviction risk," Journal of Urban Economics, Elsevier, vol. 129(C).
    2. Daniel Broxterman & Tingyu Zhou, 2023. "Information Frictions in Real Estate Markets: Recent Evidence and Issues," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 203-298, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kyoochul Kim, 2020. "Payment Performance and Residency Discounts in the Rental Housing Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(4), pages 1168-1197, December.
    2. Philippe Bracke & Edward W. Pinchbeck & James Wyatt, 2018. "The Time Value of Housing: Historical Evidence on Discount Rates," Economic Journal, Royal Economic Society, vol. 128(613), pages 1820-1843, August.
    3. Jacob L. Vigdor, 2004. "Liquidity Constraints and Housing Prices: Theory and Evidence from the VA Mortgage," NBER Working Papers 10611, National Bureau of Economic Research, Inc.
    4. Thomas J. Miceli, 1989. "Housing Rental Contracts and Adverse Selection with an Application to the Rent‐Own Decision," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 17(4), pages 403-421, December.
    5. Jonathan Halket & Lars Nesheim & Florian Oswald, 2020. "The Housing Stock, Housing Prices, And User Costs: The Roles Of Location, Structure, And Unobserved Quality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(4), pages 1777-1814, November.
    6. Halket, Jonathan & Pignatti Morano di Custoza, Matteo, 2015. "Homeownership and the scarcity of rentals," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 107-123.
    7. Fran?ois Ortalo-Magn? & Andrea Prat, 2014. "On the Political Economy of Urban Growth: Homeownership versus Affordability," American Economic Journal: Microeconomics, American Economic Association, vol. 6(1), pages 154-181, February.
    8. Tikoudis, Ioannis & Verhoef, Erik T. & van Ommeren, Jos N., 2018. "Second-best urban tolls in a monocentric city with housing market regulations," Transportation Research Part B: Methodological, Elsevier, vol. 117(PA), pages 342-359.
    9. Christian A. L. Hilber & Wouter Vermeulen, 2016. "The Impact of Supply Constraints on House Prices in England," Economic Journal, Royal Economic Society, vol. 126(591), pages 358-405, March.
    10. repec:spo:wpmain:info:hdl:2441/4dp533k0lq8dgrbgue1eid6mk1 is not listed on IDEAS
    11. Muthoka, Sila, 2015. "Household Demand for Housing in Kenya," MPRA Paper 65469, University Library of Munich, Germany.
    12. Jonathan Halket & Lars Nesheim & Florian Oswald, 2015. "The housing stock, housing prices, and user costs," SciencePo Working papers Main hal-03393224, HAL.
    13. repec:hal:spmain:info:hdl:2441/4dp533k0lq8dgrbgue1eid6mk1 is not listed on IDEAS
    14. Arnold, Lutz G. & Babl, Andreas, 2014. "Alas, my home is my castle: On the cost of house ownership as a screening device," Journal of Urban Economics, Elsevier, vol. 81(C), pages 57-64.
    15. Hilber, Christian A. L. & Vermeulen, Wouter, 2012. "The impact of supply constraints on house prices in England," LSE Research Online Documents on Economics 59254, London School of Economics and Political Science, LSE Library.
    16. Peter Lindner & Thomas Y. Mathä & Giuseppe Pulina & Michael Ziegelmeyer, 2020. "Borrowing constraints, own labour and homeownership: Does it pay to paint your walls?," BCL working papers 148, Central Bank of Luxembourg.
    17. Monkkonen, Paavo & Manville, Michael & Lens, Michael, 2024. "Built out cities? A new approach to measuring land use regulation," Journal of Housing Economics, Elsevier, vol. 63(C).
    18. Dean, Jason & Steele, Marion, 2022. "Income decline, financial insecurity, landlord screening and renter mobility," Regional Science and Urban Economics, Elsevier, vol. 95(C).
    19. Vigdor, Jacob L., 2006. "Liquidity constraints and housing prices: Theory and evidence from the VA Mortgage Program," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1579-1600, September.
    20. Fang, Limin & Stewart, Nathan & Tyndall, Justin, 2023. "Homeowner politics and housing supply," Journal of Urban Economics, Elsevier, vol. 138(C).
    21. Barakova, Irina & Bostic, Raphael W. & Calem, Paul S. & Wachter, Susan M., 2003. "Does credit quality matter for homeownership?," Journal of Housing Economics, Elsevier, vol. 12(4), pages 318-336, December.
    22. Maxence Valentin, 2021. "Regulating short‐term rental housing: Evidence from New Orleans," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(1), pages 152-186, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:reesec:v:49:y:2021:i:s1:p:74-110. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/areueea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.