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Tommy Andersson

Professor

How to Efficiently Allocate Houses under Price Controls?

Author

Tommy Andersson
Zaifu Yang
Dongmo Zhang

Summary, in English

Price controls are used in many regulated markets and well recognized as the cause of market inefficiency. This paper examines a practical housing market in the presence of price controls and provides a solution to the problem of how houses should be efficiently allocated among agents through a system of prices. We demonstrate that the dynamic auction by Talman and Yang (2008) always finds a core allocation in finitely many iterations, thus resulting in a Pareto efficient outcome.

Department/s