Shopping for Mortgage Contracts: Price Discrimination, Bank Mergers, and Negotiation

该奖项资助为一类重要市场开发新数据分析技术的工作。 这项新技术将用于分析有关消费者抵押贷款的非常详细的数据。在许多市场上，价格是通过买卖双方的谈判过程确定的。 卖家会公布价格，但消费者可以协商折扣。 卖方谈判的程度可能取决于客户的特点。 尽管折扣的流行，现有的经验技术分析市场数据忽略了差异化产品市场的折扣。 本研究项目开发并应用了一种新的经验技术，允许贴现。该技术是用来分析非常详细的数据在1992年和2004年之间在加拿大发行的大量批准的抵押贷款。 这些数据提供了关于抵押贷款特点以及家庭和市场特点的极有价值的信息。 抵押贷款是新方法的一个很好的案例研究，因为许多消费者通过协商从附近金融机构“公布”的价格/利率中获得折扣。该项目为市场集中度、差异化和信息摩擦的相互作用如何决定银行的市场力量提供了新的见解。 第一个目标是对这个市场中的折扣和价格歧视进行描述性分析。 第二个目标是了解加拿大银行业的合并如何影响抵押贷款利率。 第三个目标是为这个行业开发和评估一个完整的供求模型，并使用它来回答几个不同的问题，关于信贷法规对抵押贷款和住房需求的可能影响，了解消费者如何购买和谈判抵押贷款将使我们对这个市场如何支持住房市场有新的见解。

This award funds work that develops a new data analysis technique for an important class of markets. The new technique will be used to analyze very detailed data about consumer mortgages.In many markets prices are determined through a negotiation process between buyers and sellers. Sellers post or announce a price, but consumers may be able to negotiate a discount. The extent to which sellers negotiate may depend on customer characteristics. Despite the prevalence of discounting, existing empirical techniques for analyzing market data ignore discounting in differentiated products markets. This research project develops and applies a new empirical technique that allows for discounting.The technique is used to analyze very detailed data on a large set of approved mortgages issued in Canada between 1992 and 2004. These data provide extremely valuable information on features of the mortgage as well as household and market characteristics. Mortgages are a good case study for the new method because many consumers negotiate a discount from the price/interest rate 'posted' by a neighborhood financial institution.The project gives new insight into how the interplay of market concentration, differentiation, and information frictions determine the market power of banks. The first goal is a descriptive analysis of discounting and price discrimination in this market. The second goal is to understand how mergers in the Canadian banking industry affected mortgage interest rates. The third goal is to develop and estimate a full supply and demand model for this industry and use it to answer several different questions about the likely effect of credit regulations on demand for mortgages and housing.Understanding how consumers shop and negotiate for mortgages will give us new insight into how this market functions to support housing markets.