The home selling problem: Theory and evidence

Antonio Merlo, François Ortalo-Magné, John Rust

    Research output: Contribution to journalArticle

    Abstract

    We formulate and solve the problem of a homeowner who wants to sell her house for the maximum possible price net of transactions costs. We estimate this model using data on transaction histories for 780 residential properties in England. The estimated model fits list price dynamics and other key features of the data. In particular, a tiny menu cost of changing the listing price, as little as ten thousandths of 1% of the house value, is sufficient to explain the high degree of stickiness of listing prices observed in the data.

    Original languageEnglish (US)
    Pages (from-to)457-484
    Number of pages28
    JournalInternational Economic Review
    Volume56
    Issue number2
    DOIs
    StatePublished - May 1 2015

    ASJC Scopus subject areas

    • Economics and Econometrics

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