A system dynamics model of cyclical office oversupply

Kummerow, Max and Keen, Stephen [Author of afterword, colophon, etc.] (1999) A system dynamics model of cyclical office oversupply. Journal of Real Estate Research, 18(1), pp. 233-255. ISSN (print) 0896-5803

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Abstract

This article explores office market system dynamics through a simple simulation model. Model lag and adjustment parameters similar to real office markets generate explosive cycles. Simulations show that deviations from equilibrium can be reduced by changing the information structure of the system. System dynamics, principle/agent conflicts, a prisoners' dilemma game, faulty information (poor forecasting, market research and valuation techniques), regulatory institutions, and differing equilibria in office space and financial markets all contribute to allocative inefficiency. Thinking of office markets as a "managed feedback control system" may be a useful representation of the oversupply problem. Leverage points for system improvement may be a municipal "queue" to address agency and prisoner's dilemma problems, improved forecasting techniques and more reliance on forecasting.

Item Type: Article
Uncontrolled Keywords: Nonagricultural and Nonresidential Real Estate Markets
Research Area: Economics and econometrics
Faculty, School or Research Centre: Faculty of Arts and Social Sciences (until 2017) > School of Economics, History and Politics (from November 2012)
Depositing User: Stephen Keen
Date Deposited: 07 Mar 2016 10:32
Last Modified: 07 Mar 2016 10:32
URI: http://eprints.kingston.ac.uk/id/eprint/30227

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