In MUSSA, the behavior of the supply and demand, the economic equilibrium of them and their restrictions have a rigorous economic basis
Consumers' behavior
According to model MUSSA, all consumers in the Urban Real Estate Market, either households or economic activities, are located where they are higher bidders among all the others in the market , so that real estates are assigned to their use according to a rule of an "auction". The auction is a characteristic of markets where unique, or quasi-unique, goods are traded; this goods can not be produced in series like land. This approach, immediately, determines that the rent of each real estate corresponds to the higher bid submitted for it. Therefore, according this perspective, consumers bids are the function that define the behavior of the demand, which is specific for each consumer and, unlike other economic markets, they determine the prices of the transacted goods.
The bid function, defined as the inverse of the utility function in rents, represents the consumer's tastes and perceptions of the attributes of a real real estate, and it is conditional to its budgetary restrictions. The bid function, form and variables, are defined by the the modeler. The MUSSA approach admits linear and nonlinear functional structures for bid functions, including many variables that represent the most important characteristics of the consumer, real estate and neighbourhood. Some socioeconomic attributes are included to consider the life cycles of households, as well as buidings attributes and zone quality indices like, for example, their accessibility to the transport system, their environmental quality and location externalities.
Location Externalities
The formulation of MUSSA allows the explicit analysis of some location externalities , which are the interaction between activies in their location choice. This interaction is represented by some attributes of the bid functions that depend on the location of activities (endogenous attributes). For example, the socioeconomic status of neighbour residents, the level of equipment or the existence of certain types of annoying industrial activities, represent quantifyable attributes of this kind. In the same way, it is possible to capture the influence in the location decision of a certain economic activity, the demand for its products and services and the location of competing activities.
Also, such externalities affect the rents, therefore, it also affetcs the real estate supplies model.
Behavior of the supply
Under MUSSA approach, real estate developers decide the number of each type of real estate that they must generate in each zone of the city, considering, both the different building costs and expected rents. Taking this behavior into account, , MUSSA's real estate supply model is based on the analysis of the historical tendency of the supply, the variety of supply and rent values of the real estate in the city. Consequently, for each time cross section this model forecasts the distribution of the supply by zone and type of house.
Regulations, Subsidies and Taxes
MUSSA includes tools that allow to simulate the influence that exerts in the development of the Urban Real Estate Market, the existence of legal norms that regulate or restrict urban development , either by limiting or prohibiting the location of activities or by their space concentration. These Regulations fix different general structures of the city, as much physical (supply) as of use (location).
Also, MUSSA allows that the user adds to his analysis, instruments of urban management designated to stimulate (Subsidies) or not (Taxes) the location of activities in the city. Considering that these elements could vary according to the type of consumer, zone and type of the real estate, there are ample ranges of possible types of subsidies or taxes that the user can define and analyse.
The simulation of the impact that exerts all these instruments of urban management in the development of the city, provide interesting information evaluate their degree of influence in the urban development and assess their convenience.
Economic balance
MUSSA forecasts for a time cross section the feasible state of equilibrium between the supply and demand in the real state market, condition that is expressed by: "All the consumers are located". This state represents the economic tendency of thereal estate market forces. It is assumed that the modification the scenario , represented in the model by the change of a set of exogenous variables in a future, will cause that the supply and the real estate demand adjust trying to reach the new market equilibrium.
MUSSA recognizes that there is a set of restrictions that act on the real estate supply and demand functions and that they are conditioned or even, in extremes cases, may prevent the equlibrium in the Urban Real Estate Market. A lasge number of such restrictions can be included in the model.:
a) Restriction on the real estate supply
Along with the obvious condition of non-negative supply, MUSSA allows the inclusion of other restrictions on the supply that represent:
- The model of behavior of the real estate supply
- The Regulations that limit the land use for the location of specific activities.
- Specific real estate projects
b) Restriction about the location of activities
Also, it is possible to simulate Regulations that restrict the location of certain consumers (home or economic activities) in certain types of real estate and zones of the city.
Interaction with the transport system
The model has been designed and implemented to be compatible with a strategic four stages urban transport system, as much in the economic principles that characterize the real estate supply and demand, as in the aggregation levels with which they are represented. This compatibility allows the interaction between both models, because MUSSA provides the information about land use for the transport model , specially, for the evaluation of the generation and trip attraction models. By counterpart, the transport model gives information to MUSSA for the calculations of the space measures of accessibility and attractiveness of the urban transport system. The consumers of the Urban Real State Market consider these access measures as attributes in their location choice, which is represented in MUSSA as variables in the bid function.
In general terms,MUSSA can interact with any transport model that provides some measurement or index of the accessibility levels and attractiveness in each zone.
The only condition is that these measures are consistent with the accessibility notion perceived by residents and firms. This is obtained naturaly if they are directly derived from the models of demand by transport.
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