A Price Dispersion Equilibrium in a Spatially Differentiated Housing Market with Search Costs

An equilibrium model of search in a spatially differentiated rental housing market is formulated that predicts both rent dispersion and equilibrium vacancies. The equilibrium rent distribution is determined on the landlord's (rental supply) side given tenants' search strategies. Then tenants' optimal search strategy, denned by the share of the market a tenant searches, is determined given the costs and benefits of search and the distribution of landlords' rents. The equations of supply and demand for rental units are then combined to derive a costly information, free-entry Nash equilibrium in the market rents. Finally, the sensitivity of equilibrium vacancies and rents to changes in search costs and other exogenous parameters is explored.     

An Analysis of Office Market Rents: Some Empirical Evidence

This paper provides an empirical analysis of office building rents using data for a five-year period in a medium- sized city. The results indicate that rent levels respond to various factors in the expected manner: rents vary systematically across classes of buildings and locations, overall market conditions have a significant impact on rents, and contract variations are associated with rent differences. We also present the first evidence at the building level on the rent-vacancy adjustment process. The results show a significant relationship between rent changes and vacancies.     

Rental Price Adjustment and Investment in the Office Market

This study presents estimates of the rental price adjustment mechanism and investment response in the office construction market using data from fourteen cities over the period 1979–1983. Market rents are seen to adjust in response to local as well as national economic conditions. Investment, as measured by building permits, responds strongly to rent in a two-stage regression model, as well as to the long-term growth rate of office employment. Tests for a cobweb-type overreaction by investors do not reveal any cyclical characteristics of the market, indicating that the effects of random demand shocks are not felt beyond the normal construction period.     

The Workings of the London Office Market

This paper presents estimates of an equilibrium-based dynamic adjustment model of the office market, using supply and demand relationships to link construction, absorption, vacancies and rents to employment growth and real interest rates. The model is estimated using data from the City of London office market over 1977–1996. The model tracks the market dynamically, and the severe 1985–1996 cycle is shown to be related to the cycle in employment growth and the movement of real interest rates. The latter directly affects both construction and real rent levels.     

The Long‐Run Relationship Between House Prices and Rents

I use standard error‐correction models and long‐horizon regression models to examine how well the rent–price ratio predicts future changes in real rents and prices. I find evidence that the rent–price ratio helps predict changes in real prices over 4‐year periods, but that the rent–price ratio has little predictive power for changes in real rents over the same period. I show that a long‐horizon regression approach can yield biased estimates of the degree of error correction if prices have a unit root but do not follow a random walk, and I construct bootstrap distributions to conduct appropriate inference in the presence of this bias. The results lend empirical support to the view that the rent–price ratio is an indicator of valuation in the housing market.     

Moderate Rent Controls: A Microeconomic and Public Choice Analysis

Why do people vote for (and against) moderate rent controls? The microeconomic effects of rent controls are complex–they affect both renters and homeowners in many ways, creating a complicated pattern of winners and losers. Renters stand to gain initially from the controlled rents, but competition for scarce housing dissipates these gains. Homeowners are affected by changing housing demand patterns and shifts in property tax burdens. An econometric analysis of the 1980 Seattle, Washington rent control referendum supports the conclusion that voters recognized the microeconomic gains and losses and voted accordingly on this issue. Use of census tract data makes this public choice analysis particularly strong compared to other studies that aggregate voters at the city or county level, possibly missing important intrajurisdiction voting patterns.     

Tax Structure and Natural Vacancy Rates in the Commercial Real Estate Market

A number of studies have postulated that the Economic Recovery Tax Act of 1981 (ERTA 1981) was responsible for the dramatic overbuilding that occurred between 1981 and 1986, primarily because returns became less sensitive to "real" demand. While there has been much research on how equilibrium or "natural" vacancy rates in the real estate market are determined, beginning with Rosen and Smith's seminal paper in 1983, virtually none of this work has dealt with the impact of the tax environment. This study makes an initial attempt to answer this question with respect to equilibrium vacancies resulting from tenant (or owner) turnover. A formal model is developed that considers as an objective function the landlord's desire to maximize his/her after-tax equity returns in an environment of monopolistic competition in which individual projects face downward-sloping demand curves, owing to market conditions and a degree of heterogeneity among tenants in search costs or some other characteristic. The natural vacancy rate is shown not to depend directly upon the tax environment, but to depend indirectly upon it only to the extent that equilibrium market rents are lowered. The nature of the vacancy response depends critically upon the shape of the tenant demand response relationship upon its transition to a lower-rent region. This response is interactive with the degree of turnover and supply responsiveness within individual markets.     

Implicit Forward Rents as Predictors of Future Rents

This paper investigates the relation between the term structure of rents and future spot rents. A rich database of office rental agreements for various maturities is used to estimate the term structure of rents, and from this structure implicit forward rents are extracted. The data pertain to commercial properties in the three largest Swedish cities for the period 1998–2002. A positive relation between forward and spot rents is found in some regions, but forward rents underestimate future rent levels. Another contribution of the paper lies in the area of rental index construction. We provide evidence that rental indices should not only be quality constant ( i.e. , control for characteristics), but should also be maturity constant.     

网络参与者的租金来源与实现途径

网络合作虽然可以产生协同协应,但并非所有参与者都能够从中获取均等收益。本文从网络参与者的角度分析了其从网络合作中的获益,认为参与者的租金主要来源于共有租金和私有租金两个方面,具体细分为可占用的共有租金、内部准租金和溢入租金净值三种类型。这三类租金的实现与参与者所拥有的资源基础和资源属性密切相关,可占用的共有租金是网络参与者通过资源交换、联合、共享而创造的共有租金在不同参与者之间分配的结果;内部准租金和溢入租金净值是参与者的私有资源(或非共享资源)产生的独有的、不与其他参与者分享的私有租金,私有租金的实现也与网络合作密不可分。     

Percentage Rents with Agency

Retail leases often include a constant percentage rent above a breakpoint. Most breakpoints are restricted to a natural breakpoint, calculated as base rent divided by percentage rent. Frequently, breakpoints are much greater than sales when leases are signed. Both within and across categories of retail, percentage rents vary widely. On average percentage rents are lowest for large stores, like anchors, and highest for small stores with high operating margins. Retail leases with these and other common characteristics are shown to support second‐best investments by landlords in their stores both inside and outside shopping centers. The second‐best schedule of breakpoints and percentage rents is calculated explicitly.     

租金、力量和绩效——全球价值链背景下对竞争优势的思考

本文以“租金”、“力量”和“绩效”为核心构建概念框架来考察全球价值链中的行动者的竞争优势问题。行动者的竞争优势可以通过多种租金来源而获得,但最终体现为对市场力量和领导力量的掌握,这是由全球价值链的治理特征所决定的。不仅如此,对竞争优势的绩效衡量也应是多样化的．包括经济租金、控制权、在位权和社会就业等,这些绩效目标在一定程度上存在替代关系。     

Office Rent Determinants in the Chicago Area

This paper analyzes 1990 office asking rents in the Chicago metropolitan area. It carefully specifies a measure of the present value of a lease, taking account of important properties of rent offers. This present value is the dependent variable in the statistical analysis. The sample data analyzed pertain to 543 offices that contain about 80% of the office space in the metropolitan area. The present value of asking rents is related to many building characteristics and to each building's location. The analysis demonstrates that asking rents depend on about fifteen characteristics of the building and on a careful specification of its location.     

Do Tenants Capture the Benefits from the Low‐Income Housing Tax Credit Program?

This article compares the rent savings accrued by recipient households over the life cycle of Low‐Income Housing Tax Credit (LIHTC) projects to their allocated tax credits. A simple two‐stage empirical procedure is developed and implemented for a selected medium‐sized metropolitan statistical area. Using hedonic pricing parameters estimated in the first stage, LIHTC ceiling rents are compared to predicted market rents. The findings indicate rent savings constitute a relatively small fraction of the programs costs, suggesting developers and investors may capture some of the program's benefits. As this finding characterizes only one potential source of benefits of the LIHTC program, a brief discussion of other potential benefits to low‐income households supplements the analysis.     

Real Estate Values, Federal Income Taxation, and the Importance of Local Market Conditions

This article develops an income property valuation model that explicitly incorporates the effects of local market conditions. In particular, the model allows real rents to respond to a change in tax law, or to any exogenous shock to the system, with the dynamics of the rent change over time dependent upon current local supply and demand conditions and on the expected rate of economic growth in the local economy. Application of the model to an analysis of reduced capital gain taxation demonstrates that a partial reversal of TRA86's real estate provisions would disproportionately benefit those markets, and related lending institutions, which are most in need of a bolstering of real estate values.     

Real Estate Valuation Under Rent Control: The Case of Santa Monica

This is a study on the impact of rent control in the city of Santa Monica on rents and apartment house values. Findings include that rent control has significantly lowered rents for tenants, lowered the real values of apartment buildings and that the gross rent multipliers of buildings sold subsequent to the passage of rent control failed to decline. This last finding is a result of, according to the author, optimism on the part of buyers that the controls will be modified or eliminated in the future.     

The Economics of Architecture and Urban Design: Some Preliminary Findings

This paper makes a preliminary attempt to evaluate empirically the nature of the contribution of architectural quality to the value of buildings. An economic model is postulated that predicts equilibrium rent and vacancy behavior as a function of both design and non-design characteristics. Vacancies are created in equilibrium as a result of search and information costs and tenant heterogeneity and are observed by the landlord as price-inelastic demand behavior. Design quality is seen to influence both rent and vacancy behavior. Its effect, however, is dependent on characteristics both of the production and operating cost functions and of tenant demand for the design vs. non-design amenity. An important characteristic of the design amenity is that it is not, in general, independent of the production function for non-design amenities. The model is tested using disaggregate cross-sectional and longitudinal operating performance and amenity data from a set of 102 class A office buildings in Boston and Cambridge. Data on design quality for the set of buildings were provided by a detailed evaluation of each structure by a panel of architects. Results confirm a strong influence of design on rents; structures rated in the top 20% for design quality were predicted to extract almost 22% higher rents than those rated in the bottom 20%. In contrast, the data showed a weak relationship between vacancy behavior and design quality. Finally, good design was shown to cost more to produce on average, but not necessarily in every case. The magnitude of the point estimates of the rent, vacancy, and construction cost effects suggest that good design may not in fact be more profitable on average, but as with a lottery, may provide a small probability of a high return to the developer.     

Auction hosting site pricing and market equilibrium with endogenous bidder and seller participation

This paper characterizes the payoffs and pricing policies of auction hosting sites when both the bidders’ and the sellers’ participation is endogenous. Sellers have heterogeneous opportunity costs and make a listing decision depending on the listing fee and the expected revenue from the sale. On the other side of the market, factors such as facility in navigating an interface layout and prior bidding experience result in bidder heterogeneity with respect to participation costs. Bidders participate if their ex ante expected payoff from searching the site exceeds their participation costs. The auction site earns revenue by setting positive listing fees, trading off the increased revenue per seller resulting from a higher fee with the revenue reduction from the loss of sellers. Though this appears to be a classic monopoly problem, there are important differences. The reduction in the number of sellers participating in a site has feedback effects, as it affects the number of bidders who choose to visit that site, which in turn again affects the attractiveness of the site to sellers, and thus further reduces seller participation. In this environment the monopolist’s ability to extract rents is severely limited, even if one considers rent extraction from the seller side of the market only. It is demonstrated that the inverse demand curve is flatter than the demand curve obtained from the (inverse) distribution of seller costs. Moreover, the inverse demand curve has at least one and possibly multiple flat segments, leading to discontinuities in the profit function. Thus, small changes in the environment can lead to large changes in the optimal fee and market participation.     

Influence of Rent Differentials on the Choice between Office Rent Contracts with and without Relocation Provisions

In this paper we concern ourselves empirically with the influence of rent differentials on the choice between rent contracts with and without relocation provisions investigating the effects of relocation provisions on office rents. The study departs from the extant literature by using a switching simultaneous-equations model to estimate hedonic rent functions for alternative office lease contracts with choices of relocation provisions. The empirical results suggest that price considerations and certain lease terms are important determinants of the choice of office relocation rights. The results also suggest that certain tenant characteristics, like tenant size and creditworthiness, have only a marginal effect on the choice of relocation rights.     

Taxation by Regulation and Regulation by Taxation: The Case of Local Cable TV Regulation

Until late 1986, municipalities played a major role in cable television regulation.Municipalities not only regulated pricing and quality decisions but also taxed cablesystems in the forms of in-kind and in-cash concessions. These activities appear tofit well with the concept of taxation-by-regulation, which concludes that consumerwelfare is reduced because of the rent seeking behavior of local politicians. At thesame time however, the notion of regulation-by-taxation is equally plausible. Thatis, politicians may use taxation as a means to regulate the activity of a monopoly bylimiting monopoly rents and improving consumer welfare. This article empiricallyseparates these two effects and investigates the implications for consumer welfare.     

Do science and money go together? The case of the French biotech industry

Developing technological applications, entering exploitation alliances, and choosing between research‐ or service‐focused strategic orientations are decisions that high‐tech firms must manage concurrently. This article explores systematically the contrasting effects of these strategic determinants on rent generation and rent appropriation using the entire population of French biotech firms (1994–2002). Findings indicate that science and money do not unconditionally go together–the direct relationship between rent‐accruing resources (e.g., patents or articles) and rent appropriation varies depending on the type of resources and the strategic orientation. Moreover, the effects of strategic determinants differ for rent generation vs. rent appropriation: 1) technological application diversity undermines a firm's capacity to appropriate rents–in particular for research‐oriented firms; 2) exploitation alliances favor rent generation but hinder rent appropriation; 3) service‐oriented firms exhibit significantly better performance than research‐oriented firms. Such evidence challenges the emergence in the biotechnology industry of a ‘one‐best’ strategic trajectory, as represented by research‐intensive start‐ups funded by private money engaged in publishing and patenting races. Copyright © 2008 John Wiley & Sons, Ltd.