Vacancy Chain Models: Do They Fit into the Economist's Toolbox?

Abstract

Local housing markets are typically “thin”. This implies that vacant housing units are a scarce resource in the local housing market. Vacancy chain models constitute a class of models that explicitly link mobility and the production of vacancies within a housing market. This paper begins with the observation that this class of models is utilized to a quite low degree in the economic analysis of local housing markets. Economic methodological literature is used to discuss the reasons for this. One reason is that these models, quite unnecessarily, are presented as having a non‐behavioural basis. As economics is about the behaviour of deliberately acting agents, this way of presenting vacancy chain models is an obstacle to communication with economists. Although some shortcomings of vacancy chain models are identified and discussed here, it is concluded that such models should be included in the toolbox of economists analysing local housing markets.