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Transferring Ownership of Public Housing to Existing Tenants: A Mechanism Design Approach

Andersson, Tommy LU ; Ehlers, Lars LU and Svensson, Lars-Gunnar LU (2014) In Working Paper / Department of Economics, School of Economics and Management, Lund University 23.
Abstract
This paper explores the situation when tenants in public houses, in a specific neighborhood, are given the legislated right to buy the houses they live in but can choose to remain in their houses and pay the regulated rent. This type of legislation has been passed in many European countries in the last 30-35 years (U.K. Housing Act 1980 is a leading example). The main objective with this type of legislation is to transfer the ownership of the houses from the public authority to the tenants. To achieve this goal, the selling prices of the public houses are typically heavily subsidized. The legislating body then faces a trade-off between achieving the goals of the legislation and allocating the houses efficiently. This paper investigates... (More)
This paper explores the situation when tenants in public houses, in a specific neighborhood, are given the legislated right to buy the houses they live in but can choose to remain in their houses and pay the regulated rent. This type of legislation has been passed in many European countries in the last 30-35 years (U.K. Housing Act 1980 is a leading example). The main objective with this type of legislation is to transfer the ownership of the houses from the public authority to the tenants. To achieve this goal, the selling prices of the public houses are typically heavily subsidized. The legislating body then faces a trade-off between achieving the goals of the legislation and allocating the houses efficiently. This paper investigates this specific trade-off and identifies an allocation rule that is individual rational, equilibrium selecting, and group non-manipulable in a restricted preference domain that contains "almost all" preference profiles. In this restricted domain, the identified rule is the equilibrium selecting rule that transfers the maximum number of ownerships from the public authority to the tenants. This rule is also weakly preferred to the current U.K. system by both the existing tenants and the public authority. Finally, a dynamic process that finds the outcome of the identified rule, in a finite number of steps, is provided. (Less)
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author
organization
publishing date
type
Working Paper
publication status
published
subject
keywords
Public housing, existing tenants, equilibrium, minimum equilibrium prices, maximum trade, group non-manipulability, dynamic price process
in
Working Paper / Department of Economics, School of Economics and Management, Lund University
volume
23
pages
29 pages
publisher
Department of Economics, Lund Universtiy
language
English
LU publication?
yes
id
0c3afe5d-0a12-448d-90f3-d0d058b3bdcb (old id 4467308)
alternative location
http://swopec.hhs.se/lunewp/abs/lunewp2014_023.htm
date added to LUP
2014-06-16 15:18:30
date last changed
2016-04-16 08:43:52
@misc{0c3afe5d-0a12-448d-90f3-d0d058b3bdcb,
  abstract     = {This paper explores the situation when tenants in public houses, in a specific neighborhood, are given the legislated right to buy the houses they live in but can choose to remain in their houses and pay the regulated rent. This type of legislation has been passed in many European countries in the last 30-35 years (U.K. Housing Act 1980 is a leading example). The main objective with this type of legislation is to transfer the ownership of the houses from the public authority to the tenants. To achieve this goal, the selling prices of the public houses are typically heavily subsidized. The legislating body then faces a trade-off between achieving the goals of the legislation and allocating the houses efficiently. This paper investigates this specific trade-off and identifies an allocation rule that is individual rational, equilibrium selecting, and group non-manipulable in a restricted preference domain that contains "almost all" preference profiles. In this restricted domain, the identified rule is the equilibrium selecting rule that transfers the maximum number of ownerships from the public authority to the tenants. This rule is also weakly preferred to the current U.K. system by both the existing tenants and the public authority. Finally, a dynamic process that finds the outcome of the identified rule, in a finite number of steps, is provided.},
  author       = {Andersson, Tommy and Ehlers, Lars and Svensson, Lars-Gunnar},
  keyword      = {Public housing,existing tenants,equilibrium,minimum equilibrium prices,maximum trade,group non-manipulability,dynamic price process},
  language     = {eng},
  note         = {Working Paper},
  pages        = {29},
  publisher    = {Department of Economics, Lund Universtiy},
  series       = {Working Paper / Department of Economics, School of Economics and Management, Lund University},
  title        = {Transferring Ownership of Public Housing to Existing Tenants: A Mechanism Design Approach},
  volume       = {23},
  year         = {2014},
}