Econometric Modelling of Risk Adverse Behaviours of Entrepreneurs in the Provision of House Fittings in China

Li, Rita Yi Man (2012) Econometric modeling of risk adverse behaviours of entrepreneurs in the provision of house fittings in China, Australasian Journal of Construction Economics and Building, Vol. 12, No.1, pp.72-82

11 Pages Posted: 3 Apr 2013

Date Written: December 1, 2012

Abstract

Entrepreneurs have always born the risk of running their business. They reap a profit in return for their risk taking and work. Housing developers are no different. In many countries, such as Australia, the United Kingdom and the United States, they interpret the tastes of the buyers and provide the dwellings they develop with basic fittings such as floor and wall coverings, bathroom fittings and kitchen cupboards. In mainland China, however, in most of the developments, units or houses are sold without floor or wall coverings, kitchen or bathroom fittings. What is the motive behind this choice? This paper analyses the factors affecting housing developers‘ decisions to provide fittings based on 1701 housing developments in Hangzhou, Chongqing and Hangzhou using a Probit model. The results show that developers build a higher proportion of bare units in mainland China when: 1) there is shortage of housing; 2) land costs are high so that the comparative costs of providing fittings become relatively low.

Keywords: Imperfect information, Risk, Entrepreneur, Fittings, Probit model, Housing

JEL Classification: D80, D82, D10, P36

Suggested Citation

Li, Rita Yi Man, Econometric Modelling of Risk Adverse Behaviours of Entrepreneurs in the Provision of House Fittings in China (December 1, 2012). Li, Rita Yi Man (2012) Econometric modeling of risk adverse behaviours of entrepreneurs in the provision of house fittings in China, Australasian Journal of Construction Economics and Building, Vol. 12, No.1, pp.72-82, Available at SSRN: https://ssrn.com/abstract=2243181 or http://dx.doi.org/10.2139/ssrn.2243181

Rita Yi Man Li (Contact Author)

Hong Kong Shue Yan University ( email )

10 Wai Tsui Crescent
Braemar Hill Road
North Point
Hong Kong

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