The Home Selling Problem: Theory and Evidence

28 Pages Posted: 29 Apr 2015

See all articles by Antonio Merlo

Antonio Merlo

University of Pennsylvania - Department of Economics; Rice University

François Ortalo-Magné

Wisconsin School of Business; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

John Rust

Department of Economics, Georgetown University

Multiple version iconThere are 2 versions of this paper

Date Written: May 2015

Abstract

We formulate and solve the problem of a homeowner who wants to sell her house for the maximum possible price net of transactions costs. We estimate this model using data on transaction histories for 780 residential properties in England. The estimated model fits list price dynamics and other key features of the data. In particular, a tiny menu cost of changing the listing price, as little as ten thousandths of 1% of the house value, is sufficient to explain the high degree of stickiness of listing prices observed in the data.

Suggested Citation

Merlo, Antonio M. and Ortalo-Magne, Francois and Rust, John, The Home Selling Problem: Theory and Evidence (May 2015). International Economic Review, Vol. 56, Issue 2, pp. 457-484, 2015. Available at SSRN: https://ssrn.com/abstract=2600300 or http://dx.doi.org/10.1111/iere.12111

Antonio M. Merlo (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-7933 (Phone)
215-573-2057 (Fax)

HOME PAGE: http://www.ssc.upenn.edu/~merloa

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

Francois Ortalo-Magne

Wisconsin School of Business ( email )

4300 Grainger Hall
975 University Avenue
Madison, WI 53706-1323
United States
608-262-7867 (Phone)
608-262-7867 (Fax)

HOME PAGE: http://francois.marginalq.com

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

John Rust

Department of Economics, Georgetown University ( email )

Washington, DC 20057
United States
1-202-687-6806 (Phone)
1-202-687-6102 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
1
Abstract Views
268
PlumX Metrics