MODELING RESIDENTIAL CHOICE*

ABSTRACT. This paper presents a new approach in the modeling of residential choices for simulation purpose. The originality of the approach resides in the way recent developments in stochastic choice models are combined with deterministic mathematical programming which allows to define an equilibration process for simulation. In that respect, ex ante probabilities of housing choice based on random utility maximization under perceived constraints are distinguished from ex post probabilities of choice that respect supply constraints. The proposed model is tested on the Montreal Metropolitan Region, and a few simulation results based on a scenario of population aging and decrease in household size are analyzed.     

A RESIDENTIAL ENERGY MARKET MODEL: AN ECONOMETRIC ANALYSIS*

This paper develops a multisector residential energy policy model. This model hypothesizes that household energy behavior is affected by conditions in the housing, the mortgage finance, and the energy markets. The relationships encompassed by the model are specified with 32 single and simultaneous equations and tested with quarterly data drawn from behavior in Delaware. After the testing and evaluation of the model for its statistical performance, thereafter, three energy policies are simulated a 5 percent residential energy consumption tax, a set of conventional insulation requirements for all new housing, and a passive solar-installation requirement for all new housing. These policy choices are evaluated in terms of their impact on energy consumption, prices, demand and size of different types of housing permits, and mortgage financing. Finally, the economic and social implications of these policy impacts are discussed.     

HETEROGENEOUS TASTES AND RESIDENTIAL LOCATION*

ABSTRACT. In a simple urban model, where the only spatial distinction made is between center and suburb, we introduce a uniform distribution of preferences for land. Under a logarithmic utility function, we examine how the location and consumption decisions of individuals differ in consequence of their different preferences for land. Comparative statics indicate that the qualitative response of the city at equilibrium to changes in per capita income and transportation cost is not affected by the introduction of such heterogeneity. Possible extensions are also briefly discussed.     

A MODEL OF URBAN HOUSEHOLD BEHAVIOR WITH LEISURE CHOICE

This paper provides a complete comparative-static analysis of the simplest model of urban household behavior that incorporates time explicitly. Results involving the housing-price function and the effects on housing consumption and location (radial distance from the CBD) of exogenous changes in preferences for housing, housing price, and money costs of transportation are the same as in models not incorporating time explicitly. In addition, it is found that housing consumption and location are negatively related to commuting time, positively related to nonwage income, and ambiguously related (both a priori and empirically, for reasonable values of the relevant variables) to the wage rate.     

STRUCTURAL ESTIMATION OF RESIDENTIAL MOBILITY AND HOUSING TENURE CHOICE*

ABSTRACT. This study is devoted to studying households'decisions to move and whether to rent or own after moving. It employs dynamic discrete choice models which condition households'decisions on their circumstances at every point in time during the length of the observation while accounting for individual heterogeneity. The results show that key dynamic elements, captured by means of lagged dependent variables, as well as household heterogeneity, are significant determinants of the tenure choice and mobility decisions. Moreover, homeowners are found to be responsive to housing market conditions when adjusting their housing stock. Housing-price appreciation is found to discourage renters from becoming homeowners. Finally, our results reject the proportional monetary transaction costs specification suggesting that monetary transaction costs might be fixed.     

A DYNAMIC INTRSECTORAL,MODEL OF REGIONAL ECONOMIC GROWTH*

ABSTRACT. The dynamic relationship between sectoral value added and regional economic growth is analyzed using a stochastic intersectoral model estimated by ordinary least squares and linear systems techniques. A state-space portion of the model identifies the time element of sedoral value added. Dynamic multipliers, tracing the temporal path of regional growth, are calculated for the state of Georgia over the period 1963–1986. This application shows that the impacts of sectoral shocks can follow cyclical as well as monotonic patterns and that the direction and magnitude of the impact may change over time.     

A MANAGERIAL MODEL OF THE EFFECT OF PRODUCT MARKET STRUCTURE ON FIRM LOCATION*

ABSTRACT. This paper develops a model of firm location choice based on managerial theory of discretionary behavior. Specifically, it is assumed that the management of the firm maximizes a utility function which incorporates profits and location-specific amenities. As the firm moves from one prospective location to another, it faces a profit-amenity constraint imposed by market conditions. The optimal location decision is derived by maximizing the utility function subject to this market-imposed constraint. After examining the properties of the optimal solution, the impact of various changes in product market structure (including changes from a contestible markets perspective) on the location decision is investigated. A major finding is that the impact of a change in market structure depends upon the nature of the structure change and upon the substitution and income effects induced by the structural change.     

UNCERTAIN INCOME AND HOUSING PRICE AND LOCATION CHOICE*

ABSTRACT. In this paper, we adapt recent developments in uncertainty modeling to the location choice paradigm. In particular, we analyze the impact of income and housing price uncertainty on housing demand and location demand characteristics in a partial equilibrium framework. We begin by recognizing that housing consumption cannot readily be altered in response to changes in income and price. We find that income and house price risk affect housing and location demands in different ways. Additionally, the spatial characteristics of price risk also affect consumer housing and location demands. For example, if housing price risk is lower farther from the central city, housing demand can be greater in those locations even with the higher transportation cost. Thus, over some locations, the expected price gradient could be positive.     

SPATIAL COMPETITION WITH LOCATION-DEPENDENT COSTS*

This paper investigates the behavior of spatially-competitive firms whose costs depend on their locations. Necessary and sufficient conditions for optimum locations are derived. Comparative-statistics analysis of the equilibrium shows that the responses of firms to changes in input and output transport rates depend on the properties of consumer demand curves or are ambiguous in sign.