The Neighbor is King: Customer Discrimination in the Housing Market

39 Pages Posted: 2 Oct 2012

See all articles by Pierre-Philippe Combes

Pierre-Philippe Combes

Université de Lyon; Sciences Po - Department of Economics; Centre for Economic Policy Research (CEPR)

Bruno Decreuse

University of Angers - Research Group in Quantitative Saving (GREQAM); Ecole des Hautes Etudes en Sciences Sociales (EHESS)

Benoît Schmutz

Howard University

Alain Trannoy

National Center for Scientific Research (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS)

Date Written: September 2012

Abstract

This paper provides a method to single out customer-based discrimination in the housing market. We build a matching model with ethnic externalities where landlords differ in the number of housing units they own within the same building. Multiple-dwelling landlords discriminate more often than single-dwelling landlords only if some tenants are prejudiced against the minority group. By testing the null hypothesis whereby minority tenants are equally likely to have a multiple-dwelling landlord, we can test whether there is customer discrimination or not. We run the test on French data and show evidence of customer discrimination in the rental market.

Keywords: Customer Discrimination, Housing Market, Matching Frictions, Neighborhood Externalities

JEL Classification: J71, R21

Suggested Citation

Combes, Pierre-Philippe and Decreuse, Bruno and Schmutz, Benoît and Trannoy, Alain, The Neighbor is King: Customer Discrimination in the Housing Market (September 2012). CEPR Discussion Paper No. DP9160. Available at SSRN: https://ssrn.com/abstract=2155530

Pierre-Philippe Combes (Contact Author)

Université de Lyon ( email )

92 Rue Pasteur
Lyon, 69007
France

Sciences Po - Department of Economics ( email )

28, rue des Saints peres
Paris, 75007
France

HOME PAGE: http://https://www.gate.cnrs.fr/ppcombes

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Bruno Decreuse

University of Angers - Research Group in Quantitative Saving (GREQAM) ( email )

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France

Ecole des Hautes Etudes en Sciences Sociales (EHESS)

54, boulevard Raspail
Paris, 75006
France

Benoît Schmutz

Howard University ( email )

2400 Sixth Street, NW
Washington, DC 20059
United States

Alain Trannoy

National Center for Scientific Research (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) ( email )

54, boulevard Raspail
Paris, 75006
France

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