Fewer players, fewer homes: concentration and the new dynamics of housing supply

65 Pages Posted: 19 Dec 2018 Last revised: 23 Jun 2021

See all articles by Jacob Cosman

Jacob Cosman

Johns Hopkins University - Carey Business School

Luis Quintero

Johns Hopkins University - Carey Business School

Date Written: May 17, 2021

Abstract


Local homebuilding markets have become highly concentrated in the past decade. We document this increase in concentration and use IV regressions to show that it has led to lower production volume, fewer units in the production pipeline, and greater unit price volatility. These results are consistent with a theoretical model in which oligopolistic firms strategically set the timing, volume, and price of their new construction. Our estimates imply that market concentration has decreased the annual value of housing production nationwide by $106 billion. These findings provide further evidence that the secular decline in competitive intensity is altering macroeconomic dynamics

Keywords: Market Concentration, Market Power, Housing, Housing Supply, Housing Affordability, IV

JEL Classification: R1, R31, R52, D22, D4

Suggested Citation

Cosman, Jacob and Quintero, Luis, Fewer players, fewer homes: concentration and the new dynamics of housing supply (May 17, 2021). Johns Hopkins Carey Business School Research Paper No. 18-18, Available at SSRN: https://ssrn.com/abstract=3303984 or http://dx.doi.org/10.2139/ssrn.3303984

Jacob Cosman (Contact Author)

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

Luis Quintero

Johns Hopkins University - Carey Business School ( email )

100 International Drive
Baltimore, MD 21202
United States

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