Spillovers in Prices: The Curious Case of Haunted Houses

Review of Finance, 2020

70 Pages Posted: 24 Aug 2020 Last revised: 31 Aug 2020

See all articles by Utpal Bhattacharya

Utpal Bhattacharya

HKUST Business School

Daisy Huang

Southwestern University of Finance and Economics (SWUFE)

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance

Date Written: August 24, 2020

Abstract

Exploiting the unique institutional setting of Hong Kong’s real estate market, we uncover a curious ripple effect of haunted houses on the prices of nearby houses. Prices drop on average 20% for units that become haunted, 10% for units on the same floor, 7% for units in the same block, and 1% for units in the same estate. Our study makes two contributions. First, we provide an estimate of a large negative spillover on prices caused by a quality shock. Second, we find that the demand shock rather than the fire sale supply shock explains most of the spillover.

Keywords: fire sales, negative spillovers, haunted houses

JEL Classification: D62, H23, R21, R31

Suggested Citation

Bhattacharya, Utpal and Huang, Daisy and Nielsen, Kasper Meisner, Spillovers in Prices: The Curious Case of Haunted Houses (August 24, 2020). Review of Finance, 2020, Available at SSRN: https://ssrn.com/abstract=3679828 or http://dx.doi.org/10.2139/ssrn.3679828

Utpal Bhattacharya (Contact Author)

HKUST Business School ( email )

Clear Water Bay
Kowloon
Hong Kong

Daisy Huang

Southwestern University of Finance and Economics (SWUFE) ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance ( email )

A4.17 Solbjerg Plads 3
Copenhagen, Frederiksberg 2000
Denmark

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