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Alternative Decision‐Making Models for Housing: The Question of Efficiency
Author(s) -
Nesslein Thomas S.
Publication year - 1983
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.1467-6435.1983.tb00005.x
Subject(s) - nonmarket forces , allocative efficiency , economics , market failure , market mechanism , institution , market structure , microeconomics , component (thermodynamics) , public economics , factor market , macroeconomics , physics , political science , law , thermodynamics
SUMMARY This paper examines the efficiency of housing resources allocation under alternative allocative mechanisms. The study focuses on three broadly defined decision‐making models: (1) the market model; (2) the central planning model; (3) the welfare state model. Particular attention is given the three fundamental components of economic organization; (1) the decision‐making structure; (2) the information structure; (3) the motivation structure. While this policy study makes use of the theory of market failure, the analysis departs from conventional practice by explicitly and consistently employing a comparative institution framework. That is, a theory of nonmarket failure is integrated into the analysis and policy prescriptions derived only after careful assessment of the imperfections of real world housing markets in comparison with the imperfections of real world nonmarket housing models. The essential conclusion drawn is that the domain of housing market failure is smaller than generally assumed and that the price mechanism is a vital component of a rationally functioning housing system.