Interdependence Effects of Housing Abandonment and Renovation

10 Pages Posted: 4 Jan 2007

See all articles by Tammie Simmons-Mosley

Tammie Simmons-Mosley

California State University, East Bay - Department of Management

Abstract

This study uses a methodology for analyzing the interdependence effects of abandonment and renovation for profit-maximizing landlords. After using a Prisoners' Dilemma game of abandonment to establish the existence of the interdependence phenomenon between internal rates of return, a Stackelberg framework is employed to model the interdependence effects of abandonment and renovation. The Stackelberg model appropriately defines the timing payoffs of the landlords' operational decisions. This model shows that as long as one landlord does not abandon, the optimal decision for the other landlord is to renovate their property.

Keywords: abandonment, renovation, landlord, profit-maximizing, interdependence

JEL Classification: R31, R33, R34, R38, R10-15, O21, I32, I38

Suggested Citation

Simmons-Mosley, Tammie, Interdependence Effects of Housing Abandonment and Renovation. Journal of Real Estate Research, Vol. 25, No. 4, 2003, Available at SSRN: https://ssrn.com/abstract=954800

Tammie Simmons-Mosley (Contact Author)

California State University, East Bay - Department of Management ( email )

25800 Carlos Bee Boulevard
Hayward, CA 94542
United States

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