Abstract
Previously unrecognized relationships between housing opportunities, residential mobility, and housing prices are identified within a multisectoral model of vacancy transfers within a local housing market. The relationships are identified by presenting the vacancy-transfer model as a simple linear program. The primal program seeks a vector of vacancy transfers which minimizes the volume of new stock additions among market sectors required to satisfy a prespecified vector of primary vacancy demand. The dual program seeks a vector of shadow housing-prices which maximizes the value of units absorbed by primary demand while insuring that quasi-rents are driven to zero. Thus, a duality between vacancy transfers and housing price is identified, and the role of new stock development costs in housing price determination is defined.
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