Measuring the Supply Response to Housing Allowances.

C. Peter Rydell

Expert InsightsPublished 1976

One objective of the Housing Assistance Supply Experiment is to measure price-and-quantity changes in the supply of housing services following stimulation of the housing market by allowance-augmented demand. Alternative methodologies are: input accounting, input-output accounting using production functions, and output accounting using hedonic indexes. Empirical work on a three-factor (land, improvements, and services) CES production function for rental housing indicates that the elasticity of substitution between pairs of inputs is approximately .5 for all property types examined. The distribution parameters in the production function vary by property type, however, and this finding is consistent with the common observation that apartment buildings tend to be located on higher priced land than single-family houses. 35 pp. Ref.

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Rydell, C. Peter, Measuring the Supply Response to Housing Allowances. Santa Monica, CA: RAND Corporation, 1976. https://www.rand.org/pubs/papers/P5564.html.
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