Modeling interactions between institutions of housing markets based on nonlinear functions of costs

• Main Authors: Mikhail I. Geras’kin, Maria V. Ivanova
• Format: Article
• Language: English
• Published: Tatar Educational Center "TAGLIMAT" Ltd. 2021-06-01
• Series: Aktualʹnye Problemy Èkonomiki i Prava
• Subjects: economics and national economy management
• Online Access: http://apel.ieml.ru/storage/archive_articles/10017.pdf

Objective to study the optimal pricing strategies of firms in the ldquorealtor ndash bank ndash insurerrdquo system under nonlinear cost functions. nbsp Methods game theory supply chain coordination multicriteria optimization. nbsp Results the housing market is one of the most dynamically developing segments of the economy. Pricing patterns in this market are not always subject to market laws since they are influenced by other factors such as the availability of loans the presence of agents the rates in the insurance market etc. To analyze the pricing processes the authors consider a vertically integrated system of interaction of agents ldquorealtor ndash bank ndash insurerrdquo. A system of optimality conditions for housing market agents realtor bank and insurer under nonlinear cost functions is derived corresponding to different types of scale effects. The results of numerical experiments are presented showing the nature of price interdependencies in these markets in cases of convexity or concavity of the agentsrsquo cost functions. nbsp Scientific novelty in contrast to the ldquorealtor ndash bank ndash insurerrdquo system with linear cost functions our study demonstrates the following insights first if all agents have concave cost functions then the housing price mortgage interest rate and insurance rate are lower compared to the situation in which agents have convex cost functions second an increase in the intrasystem commission rate leads to an increase in the price of the agent who pays the commission and a decrease in the price of the agent who receives it third an increase in the commission rate causes a sharper reduction in the agentrsquos price if the agent has a convex cost function and the counterparty has a concave one than in the opposite case. nbsp Practical significance the results can be applied in the elaboration of state programs for the development of the housing market mortgage subsidies and regulation of the insurance market in addition on the basis of our recommendations firms in the ldquorealtor ndash bank ndash insurerrdquo system can make mutually beneficial decentralized decisions.