Volatility in the Housing Market: Evidence on Risk and Return in the London Sub-market

The impact of volatility in housing market analysis is reconsidered via examination of the risk-return relationship in the London housing market is examined. In addition to providing the first empirical results for the relationship between risk (as measured by volatility) and returns for this submarket, the analysis offers a more general message to empiricists via a detailed and explicit evaluation of the impact of empirical design decisions upon inferences. In particular, the negative risk-return relationship discussed frequently in the housing market literature is examined and shown to depend upon typically overlooked decisions concerning components of the empirical framework from which statistical inferences are drawn

Supermarket Pricing Strategies

Most supermarket firms choose to position themselves by offering either everyday low prices (EDLP) across several items or offering temporary price reductions (promotions) on a limited range of items. While this choice has been addressed from a theoretical perspective in both the marketing and economic literature, relatively little is known about how these decisions are made in practice, especially within a competitive environment. This paper exploits a unique store level data set consisting of every supermarket operating in the United States in 1998. For each of these stores, we observe the pricing strategy the firm has chosen to follow, as reported by the firm itself. Using a system of simultaneous discrete choice models, we estimate each store's choice of pricing strategy as a static discrete game of incomplete information. In contrast to the predictions of the theoretical literature, we find strong evidence that firms cluster by strategy by choosing actions that agree with those of its rivals. We also find a significant impact of various demographic and store/chain characteristics, providing some qualified support for several specific predictions from marketing theory.EDLP, promotional pricing, positioning strategies, supermarkets, discrete games

How Property Markets Determine Welfare Outcomes: An Equilibrium Sorting Model Analysis of Local Environmental Interventions

This paper examines the pivotal role played by property markets in determining the magnitude and distribution of welfare changes resulting from localised environmental change. We address that issue using an equilibrium sorting model (ESM) calibrated, by way of example, to the circumstances of a road infrastructure project in the English town of Polegate. Previous ESM research has tended to assume that all households rent property from a fixed property stock. The narrative that arises from those models concerns environmental gentrification, wherein access to environmentally improved locations is appropriated by the relatively wealthy through their ability to out-compete the less wealthy in the rental property market. Our research shows that to be only part of a much more complex story. We develop a model that extends the sophistication with which ESMs replicate property market dynamics, allowing for households to choose whether to rent or purchase their home and introducing greater realism into housing supply responses to changing market conditions. Our research shows that property markets redistribute welfare gains across the population in complex ways in which tenure choice and housing supply constraints play central roles.This paper has been produced as part of a studentship jointly funded by the ESRC and Department of Transport (Ref ES/G018618/1). The research was additionally supported by the ESRC through the Social and Environmental Economic Research (SEER) project (Ref RES-060-25-0063).