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Strategies for search on the housing market and their implications for price dispersion

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  • Tristan-Pierre Maury

    (EDHEC Economics Research Centre - EDHEC - EDHEC Business School - UCL - Université catholique de Lille)

  • Fabien Tripier

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes)

Abstract

When an household needs to change its home, a new house must be bought and the old one must be sold. In order to complete these two transactions, the household can adopt either a sequential or a simultaneous search strategy. In sequential strategies, it first buys (or sells) and only after tries to sell (or buy), to avoid either being homeless or holding two houses, respectively. In the simultaneous strategy, the household tries to buy and sell simultaneously. If the household adopts the simultaneous strategy, it can reduce its search costs, but becomes exposed to the risk of becoming a homeless renter or the owner of two houses. The literature generally considers only the sequential search strategy. However, we show in this article that the simultaneous strategy is (i) generally welfare improving for households, (ii) sometimes the sole equilibrium strategy, and (iii) at the origin of price dispersion on the housing market.

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  • Tristan-Pierre Maury & Fabien Tripier, 2010. "Strategies for search on the housing market and their implications for price dispersion," Working Papers hal-00480484, HAL.
    • Handle: RePEc:hal:wpaper:hal-00480484
    Note: View the original document on HAL open archive server: https://hal.science/hal-00480484
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    References listed on IDEAS

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    Cited by:

    1. Lisi, Gaetano & Iacobini, Mauro, 2012. "Estimation of a Hedonic House Price Model with Bargaining: Evidence from the Italian Housing Market," MPRA Paper 66474, University Library of Munich, Germany.
    2. Sniekers, F.J.T., 2014. "The order of buying and selling: Multiple equilibria in the housing market," CeNDEF Working Papers 14-02, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
    3. Gaetano Lisi, 2011. "Price Dispersion in the Housing Market: The Role of Bargaining and Search Costs," Working Papers hal-00628323, HAL.
    4. Lisi, Gaetano, 2011. "Price dispersion in the housing market: the role of bargaining and search costs," MPRA Paper 33863, University Library of Munich, Germany.

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