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This paper deals with the estimation, by means of nonlinear methods, of preference parameters from observation of behaviour in housing markets. It differs from previous work on housing market behaviour in several important aspects. First, it treats the choice of tenure mode-that is, whether to rent or own-and the housing consumption decision as a joint decision. Second, it explicitly uses the same behavioural model in analysing these discrete and continuous elements of housing market behaviour. Third, it allows for an analysis of the role of capital market imperfections and discriminatory practices in constraining housing market decisions.
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Henderson et al. (1986) studied this question.
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