Scandinavian Working Papers in Economics
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Department of Economics, Lund University Working Papers, Department of Economics, Lund University

No 2015:12:
Transferring Ownership of Public Housing to Existing Tenants: A Market Design Approach

Tommy Andersson (), Lars Ehlers () and Lars-Gunnar Svensson ()

Abstract: This paper explores a housing market with an existing tenant in each house and where the existing tenants initially rent their houses. The idea is to identify equilibrium prices for the housing market given the prerequisite that a tenant can buy any house on the housing market, including the one that he currently is possessing, or continue renting the house he currently is occupying. The main contribution is the identification of an individually rational, equilibrium selecting, and group non-manipulable price mechanism in a restricted preference domain that contains almost all preference profiles. In this restricted domain, the identified mechanism is the equilibrium selecting mechanism that transfers the maximum number of ownerships to the existing tenants. We also argue that the theoretical model represents an extension and an improvement of the U.K. Housing Act 1980 whose main objective is to transfer the ownership of the houses to the existing tenants.

Keywords: Existing tenants; equilibrium; minimum equilibrium prices; maximum trade; group non-manipulability; dynamic price process; (follow links to similar papers)

JEL-Codes: C71; C78; D71; D78; (follow links to similar papers)

34 pages, April 24, 2015

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