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Monopolistic competition, price discrimination as a development company behaviors in the housing primary market

In: Papers presented during the Narodowy Bank Polski Workshop: Recent trends in the real estate market and its analysis - 2015 edition

Author

Listed:
  • Jacek Łaszek
  • Krzysztof Olszewski
  • Joanna Waszczuk

Abstract

Firms operating in the property sector use information asymmetry and the local monopoly to differentiate prices of housing units. Selling similar housing to purchasers at various prices allows them to maximize profits. The aim of this article is to analyze empirically the behavior of developers, that shape market situation. It is necessary to depart from the classical analysis of enterprises that operate in a free and competitive market and produce typical, homogeneous goods. We analyze firms that produce heterogeneous goods and make individual transactions with each client. We use the hedonic regression to compare the theoretical and empirical prices per sq. m. of dwelling in the primary market in Warsaw and find significant dispersions. The price discrimination strategy, caused mainly by changes in demand could be one of the explanations of the observed high, upward elasticity of prices.

Suggested Citation

  • Jacek Łaszek & Krzysztof Olszewski & Joanna Waszczuk, 2016. "Monopolistic competition, price discrimination as a development company behaviors in the housing primary market," Chapters from NBP Conference Publications, in: Hanna Augustyniak & Jacek Łaszek & Krzysztof Olszewski & Joanna Waszczuk (ed.), Papers presented during the Narodowy Bank Polski Workshop: Recent trends in the real estate market and its analysis - 2015 edition, chapter 9, pages v1, 185-2, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpchp:2-9
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    File URL: https://static.nbp.pl/publikacje/materialy-i-studia/243_en1.pdf
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    Citations

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    Cited by:

    1. Krzysztof Olszewski & Jacek Łaszek & Joanna Waszczuk, 2023. "An unequal reaction of housing starts to house prices in different regions of Poland," Bank i Kredyt, Narodowy Bank Polski, vol. 54(4), pages 437-458.
    2. Lozano Navarro, Francisco-Javier, 2021. "Análisis de la concentración de mercado en la actividad inmobiliaria de Santiago [Market concentration of real estate in Santiago]," MPRA Paper 118262, University Library of Munich, Germany.
    3. George A. Matysiak & Krzysztof Olszewski, 2019. "A panel analysis of Polish regional cities: residential price convergence in the primary market," NBP Working Papers 316, Narodowy Bank Polski.
    4. Brzezicka Justyna, 2022. "The Application of the Simplified Speculative Frame Method for Monitoring the Development of the Housing Market," Real Estate Management and Valuation, Sciendo, vol. 30(1), pages 84-98, March.
    5. Kauko Tom, 2019. "Institutions at the Interface of Urban Planning and Real Estate," Real Estate Management and Valuation, Sciendo, vol. 27(3), pages 17-30, September.

    More about this item

    Keywords

    Monopolistic competition; price differentiation; housing market; information asymmetry;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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