This paper explores a housing market with an existing tenant in each house and where the existing tenants initially rent their houses. The idea is to identify equilibrium prices for the housing market given the prerequisite that a tenant can buy any house on the housing market, including the one that he currently is possessing, or continue renting the house he currently is occupying. The main contribution is the identification of an individually rational, equilibrium selecting, and group non-manipulable price mechanism in a restricted preference domain that contains almost all preference profiles. In this restricted domain, the identified mechanism is the equilibrium selecting mechanism that transfers the maximum number of ownerships to the existing tenants. We also argue that the theoretical model represents an extension and an improvement of the U.K. Housing Act 1980 whose main objective is to transfer the ownership of the houses to the existing tenants.
|Research areas and keywords
- Existing tenants, equilibrium, minimum equilibrium prices, maximum trade, group non-manipulability, dynamic price process
|Publisher||Department of Economics, Lund Universtiy|
|Number of pages||34|
|Publication status||Published - 2015|
|Name||Working Paper / Department of Economics, School of Economics and Management, Lund University|