ABSTRACT
This chapter suggests additional tests of the competitive theory of the housing market. It explains the crucial simplifying assumption which makes it possible to view the market for housing service as a competitive market in which a homogeneous good is sold. The assumption of a homogeneous good called housing service can only be rejected if theories of housing market without this assumption have greater explanatory power. If the housing markets are perfectly competitive and if it is neither more costly to provide small quantities of housing service nor to provide housing service to low income families, then the poor will not pay more for housing service. It is instructive of the workings of a perfectly competitive housing market to demonstrate the result. The chapter presents interpreting the poor-pay-more hypothesis in terms of the theory. Slum clearance is the destruction of slum dwelling units by government with or without compensation to the owner.
