Eres : Digital Library : Works

Paper eres2010_352:
CONSUMPTION OF REAL ASSETS AND THE CLIENTELE EFFECT

id eres2010_352
authors Chernobai, Ekaterina; Chernobai, Anna
year 2010
title CONSUMPTION OF REAL ASSETS AND THE CLIENTELE EFFECT
source 17th Annual European Real Estate Society Conference in Milan, Italy
summary This paper develops a theoretical model that explains how long-term consumption goals influence households' choice of real assets in situations when these assets have no investment value. Using a suburban residential housing market that exemplifies such a market, we develop a general equilibrium model for the valuation of illiquid assets. We show that, in equilibrium, clientele effect persists, with long-tenure agents overwhelmingly choosing higher quality properties and short-tenure agents settling for lower quality properties. Equilibrium values of our model variables related to buyers and sellers are simultaneously determined in a competitive Nash equilibrium. We also show that price-based liquidity and time-based liquidity measures may behave in a conflicting manner in equilibrium, which is a novel result in itself. This paper contributes to the understanding of a consumption-based clientele effect as well as different measures of liquidity.
keywords Asset pricing, clientele effect, illiquidity, search, housing, asymmetric information, buyer heterogeneity, time on the market, quality signalling
series ERES:conference
email echernobai@csupomona.edu
more http://www.eres2010.org/index.asp?page=papers_download
content file.pptx (845,354 bytes)
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ratings
session Housing Economics (7)
last changed 2010/08/04 20:47
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