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Maintenance, Housing Quality, and Vacancies under Imperfect Information
Author(s) -
Read Colin
Publication year - 1991
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00546
Subject(s) - landlord , renting , imperfect , economic rent , perfect information , economics , microeconomics , quality (philosophy) , monopoly , reservation , profit (economics) , partial equilibrium , distribution (mathematics) , rental housing , perfect competition , complete information , general equilibrium theory , computer science , computer network , mathematical analysis , philosophy , linguistics , mathematics , epistemology , political science , law
A model of a rental housing market is presented in which landlords economize on the maintenance of housing quality to profit from tenants imperfect information. In a partial equilibrium model that describes tenants by their distribution of minimum acceptable (reservation) quality for units priced at an identical rent, these profits induce entry of new units, resulting in rental vacancies. The equilibrium number of landlords and the market vacancy rate are derived in a free entry, imperfect information equilibrium in which the distribution of rental unit qualities range from the competitive quality to that which would be offered by a monopoly landlord.