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Measuring the Efficiency Cost of Rent Control

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  • Donald F. Vitaliano

Abstract

This paper estimates the burden of lost producer surplus imposed on landlords by rent control. The approach employed measures the reduction in Marshallian quasi‐rent from the side of the derived demand for factors rather than the short‐run supply of housing. A constant elasticity of substitution production function is employed to derive the input demand equation. The equation is estimated using post‐war rent control data from five major New York State cities. It turns out that rent control reduced quasi‐rent about 15%. The deadweight loss is estimated at 1.5% of gross rental payments or about 5% of net income before debt charges.

Suggested Citation

  • Donald F. Vitaliano, 1986. "Measuring the Efficiency Cost of Rent Control," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 14(1), pages 61-71, March.
    • Handle: RePEc:bla:reesec:v:14:y:1986:i:1:p:61-71
    DOI: 10.1111/1540-6229.00369
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    References listed on IDEAS

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    1. Gregory K. Ingram, 1977. "Index to "Residential Location and Urban Housing Markets"," NBER Chapters, in: Residential Location and Urban Housing Markets, pages 389-403, National Bureau of Economic Research, Inc.
    2. Gregory K. Ingram, 1977. "Residential Location and Urban Housing Markets," NBER Books, National Bureau of Economic Research, Inc, number ingr77-1, May.
    3. Gregory K. Ingram, 1977. "Introduction to "Residential Location and Urban Housing Markets"," NBER Chapters, in: Residential Location and Urban Housing Markets, pages -7, National Bureau of Economic Research, Inc.
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