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Research Seminars & Workshops @ IRES

Ms Qiu Leiju
Department of Real Estate, NUS

Residential Location Choice with Social Interactions: a Theoretical Analysis based on Search Model


6 March 2012, Tuesday


12.30pm - 2.00pm


RMI Executive Seminar Room
21 Heng Mui Keng Terrace, Level 4


Recently social behavior of households attracts intensive research attentions. It is natural to import social interactions into the research on residential location choice, as it is a social activity highly involving social factors. This paper develops a theoretical model which is inspired by the streams of literature on social interactions, refers to the framework of search model, and contributes to the current studies on residential location choice. This model can explain the residential location choice behavior regarding to search cost, social capital and social interactions. I numerically solve the equilibrium of this model based on a group of people with social interactions. The results show that lower search cost can lead to higher level segregation of households and increase their utility. Furthermore, it is found that diminishing marginal utility premium for social interactions can also enhance the segregation of households.

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