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The Misallocation of Housing under Rent Control

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Author Info
Edward L. Glaeser
Erzo F. P. Luttmer

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Abstract

The standard analysis of price controls assumes that goods are efficiently allocated, even when there are shortages. But if shortages mean that goods are randomly allocated across the consumers that want them, the welfare costs from misallocation may be greater than the undersupply costs. We develop a framework to empirically test for misallocation. The methodology compares consumption patterns for demographic subgroups in rent-controlled and free-market places. We find that in New York City, which is rent-controlled, an economically and statistically significant fraction of apartments appears to be misallocated across demographic subgroups.

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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 93 (2003)
Issue (Month): 4 (September)
Pages: 1027-1046
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Handle: RePEc:aea:aecrev:v:93:y:2003:i:4:p:1027-1046

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Deacon, Robert T & Sonstelie, Jon, 1989. "The Welfare Costs of Rationing by Waiting," Economic Inquiry, Oxford University Press, vol. 27(2), pages 179-96, April.
  2. Olsen, Edgar O, 1972. "An Econometric Analysis of Rent Control," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1081-1100, Nov.-Dec.. [Downloadable!] (restricted)
  3. Edward L. Glaeser, 1996. "The Social Costs of Rent Control Revisited," NBER Working Papers 5441, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Barzel, Yoram, 1974. "A Theory of Rationing by Waiting," Journal of Law & Economics, University of Chicago Press, vol. 17(1), pages 73-95, April.
  5. Arnott, Richard, 1995. "Time for Revisionism on Rent Control?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 99-120, Winter. [Downloadable!] (restricted)
  6. Suen, Wing, 1989. "Rationing and Rent Dissipation in the Presence of Heterogeneous Individuals," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1384-94, December. [Downloadable!] (restricted)
  7. Gyourko, Joseph & Linneman, Peter, 1989. "Equity and efficiency aspects of rent control: An empirical study of New York City," Journal of Urban Economics, Elsevier, vol. 26(1), pages 54-74, July. [Downloadable!] (restricted)
  8. Cheung, Steven N S, 1974. "A Theory of Price Control," Journal of Law & Economics, University of Chicago Press, vol. 17(1), pages 53-71, April.
  9. Heckman, James & Scheinkman, Jose, 1987. "The Importance of Bundling in a Gorman-Lancaster Model of Earnings," Review of Economic Studies, Blackwell Publishing, vol. 54(2), pages 243-55, April. [Downloadable!] (restricted)
  10. Edward L. Glaeser & Erzo F. P. Luttmer, 1997. "The Misallocation of Housing Under Rent Control," NBER Working Papers 6220, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Erzo F.P. Luttmer, 2007. "Does the Minimum Wage Cause Inefficient Rationing?," NBER Working Papers 13012, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Lucas W. Davis & Lutz Kilian, 2008. "The Allocative Cost of Price Ceilings in the U.S. Residential Market for Natural Gas," NBER Working Papers 14030, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Joachim Voth & Peter Temin, 2005. "Financial Repression in a Natural Experiment: Loan Allocation and the Change in the Usury Laws in 1714," Economics Working Papers 858, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  4. Davis, Lucas W & Kilian, Lutz, 2007. "The Allocative Cost of Price Ceilings: Lessons to be Learned from the US Residential Market for Natural Gas," CEPR Discussion Papers 6142, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Carl Mason & John Quigley, 2006. "The Curious Institution of Mobile Home Rent Control: An Analysis of Mobile Home Parks in California," Berkeley Program on Housing and Urban Policy, Working Paper Series 1066, Berkeley Program on Housing and Urban Policy. [Downloadable!]
  6. Filip Palda, 2001. "Rent Control Evasion: Effects on Income and Deadweight Loss," Urban/Regional 0112001, EconWPA. [Downloadable!]
  7. Edward L. Glaeser & Erzo F. P. Luttmer, 2003. "The Misallocation of Housing under Rent Control," American Economic Review, American Economic Association, vol. 93(4), pages 1027-1046, September. [Downloadable!] (restricted)
    Other versions:
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