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Search frictions in rental markets: Evidence from urban China
Department of Building and Real Estate, The Hong Kong Polytechnic University, Department of Building and Real Estate, The Hong Kong Polytechnic University.
Department of Construction Management,B76 Tsinghua University.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.
Department of Building and Real Estate, The Hong Kong Polytechnic University, Department of Building and Real Estate, The Hong Kong Polytechnic University.
2024 (English)In: China economic review, ISSN 1043-951X, E-ISSN 1873-7781, Vol. 83, article id 102100Article in journal (Refereed) Published
Abstract [en]

In this paper, we study consumer search in a housing market subject to objective frictions induced by intermediaries and psychological frictions intrinsic to tenants themselves. Using rental data from a leading real estate brokerage company during 2016 and 2018, we find a unimodal distribution of objective search frictions and a bimodal distribution of psychological search frictions revealed by tenants' search behaviors. This bimodal distribution originates from divergent search strategies of tenants with different search criteria. Furthermore, psychological search frictions explain the deviation between a tenant's actual choice and stated preference, and enhance the degree of overpay/mark-up in the deal. These effects of psychological frictions led by divergent search strategies hold when we consider the expertise/incentive of agents and the rigidity/opportunity cost of tenants' search. Aggregately, psychological search frictions result in a dispersed and asymmetric distribution of rent residuals.

Place, publisher, year, edition, pages
Elsevier BV , 2024. Vol. 83, article id 102100
Keywords [en]
China, Friction, Rental market, Search strategy
National Category
Transport Systems and Logistics
Identifiers
URN: urn:nbn:se:kth:diva-341743DOI: 10.1016/j.chieco.2023.102100ISI: 001139839600001Scopus ID: 2-s2.0-85180070351OAI: oai:DiVA.org:kth-341743DiVA, id: diva2:1823692
Note

QC 20240103

Available from: 2024-01-03 Created: 2024-01-03 Last updated: 2024-02-06Bibliographically approved

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Yang, Zan

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CiteExportLink to record
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Citation style
  • apa
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