The simulation of search behavior in urban housing markets

by William McNaught

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Description of a micro-level urban simulation model of Cook County, Illinois. Although similar to the NBER Urban Simulation Model in its emphasis of polycentric employment locations, heterogeneous housing bundles, neighborhood externalities, and discrimination restrictions on the housing choices of minorities, the model is unique in one respect--its depiction of market adjustment processes. Most urban simulation models do not attempt to model market behavior. Those models which do contain market sectors use equilibrium-oriented market algorithms such as tatonnement price adjustments or linear programming routines, the technique chosen by the NBER Model. This model uses sequential search theory to develop an algorithm to simulate market behavior of housing buyers and sellers within a disequilibrium market setting.

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