A New Approach to Estimating Equilibrium Models for Metropolitan Housing Markets

Epple, Dennis; Quintero, Luis; Sieg, Holger

doi:10.2139/ssrn.3216207

A New Approach to Estimating Equilibrium Models for Metropolitan Housing Markets

Johns Hopkins Carey Business School Research Paper No. 18-12

56 Pages Posted: 20 Jul 2018

See all articles by Dennis Epple

Dennis Epple

Carnegie Mellon University; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Luis Quintero

Johns Hopkins University - Carey Business School

Holger Sieg

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: May 7, 2018

Abstract

We formulate and estimate a new equilibrium model of metropolitan housing markets with housing differentiated by quality. Quality is a latent variable that captures all features of a dwelling and its environment. We estimate the model for Chicago and New York, obtaining hedonic housing price functions for each quality level for each metropolitan area, stocks of each quality, and compensating variations required for a household of a given income in Chicago to be equally well off in New York.

Keywords: Hedonic Models, Nonlinear Pricing, Housing Supply, Multiple Housing Markets, Semi-parametric Estimation

JEL Classification: R2, R31, R32, D11, R21, R23, D62, C14

Suggested Citation: Suggested Citation

Epple, Dennis and Quintero, Luis and Sieg, Holger, A New Approach to Estimating Equilibrium Models for Metropolitan Housing Markets (May 7, 2018). Johns Hopkins Carey Business School Research Paper No. 18-12. Available at SSRN: https://ssrn.com/abstract=3216207 or http://dx.doi.org/10.2139/ssrn.3216207