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Gaetano Lisi
''The Hedonic Price Function in a Matching Model of Housing Market''
( 2011, Vol. 31 No.3 )
This paper develops a theoretical model in which the matching framework à la Pissarides (2000) extended to the housing market is integrated with the hedonic price theory. Market tightness and selling price collectively determine the long-run equilibrium of the economic system in which a seller can become a buyer, and vice versa. As a result, the house price depends not only on the housing characteristics but also on the market tensions and bargaining power of the parties. This integration allows to overcome a major drawback of the hedonic price theory, namely the assumption of perfect competition.
Keywords: hedonic price theory, housing market, search and matching models
JEL: R2 - Urban, Rural, and Regional Economics: Household Analysis: General
R3 - Production Analysis and Firm Location: General
Manuscript Received : Jun 23 2011 Manuscript Accepted : Aug 21 2011

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