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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 26, No. 3, pp.337-360
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2013

The Effect of a Special Interest Group on Apartment Price Collusion

Eun Pyo Hong
Graduate Student, Department of Economics, Seoul National University, Shillim Dong, Seoul, 151-746 onlyforjesus@snu.ac.kr

JEL Classification: C5, D4

Abstract

This paper examines the effect of collusion by a special interest group (Association of the Resident Housewives, ARH) in the apartment market between 2006 and 2007 in Korea. Using the Difference-In-Difference (DID) design and carefully matching the apartments, it is estimated that every instance of collusion results in an increase of from KRW 7.2 to 40.3 million in the apartment price. The amount of increase varies by districts and apartment unit characteristics. The result in this paper shows that the effects of collusion explain the cause of a rapid rise in the price of apartment between 2006 and 2007. This paper contributes to the collusion literature by closely examining how a special interest group (ARH) affects price through the collusion.

Keywords:

Apartment price, Collusion, Special interest group, Difference in Difference (DID), Bidding ring

Acknowledgments

This work was supported by “The Second Stage of the Brain Korea 21 Department of Economics, Seoul National University” Project in 2011. I appreciate the comments of the anonymous referees on this paper.

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Web sites

  • www.nland.kbstar.com (Kookmin bank):
  • www.mltm.go.kr
  • www.naver.com, (NAVER)
  • www.neonet.co.kr, (Real Estate Bank)
  • www.r114.co.kr, (Real Estate 114)
  • http://www.seoul.go.kr, (Seoul survey)
  • https://en.wikipedia.org, (Wikipedia)