The Effect of Market Power on Housing Prices

Abstract: The Effect of Market Power on Housing Prices Abstract: In this paper we wish to examine whether market power of housing suppliers is predictive of the price of housing in the municipality of Stockholm. This is, in part, done by developing a measure of market power - market concentration - and regressing measures of price on it. The regression analysis shows that there is no significant connection between market power and price. Moreover, we find that the descriptive data shows strong signs of departure from perfect competition and indicates the presence of market power. This study concludes that market power does not necessarily have an effect on price.