Efficiency rents: A new theory of the natural vacancy rate for rental housing
AbstractThis paper adapts the theory of efficiency wages to explain the natural vacancy rate in rental housing markets. A positive vacancy rate provides landlords an incentive to invest in maintenance because if they fail to do so, some tenants will leave and the unit will sit vacant for a finite period of time. The resulting foregone rent will penalize landlords’ failure to maintain. Habitability laws, which have been enacted by states since the 1960s, provide a non-market penalty which lessens the need for market enforcement. Variation in these laws by state offers an opportunity to test the theory.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Housing Economics.
Volume (Year): 22 (2013)
Issue (Month): 1 ()
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Web page: http://www.elsevier.com/locate/inca/622881
Efficiency rents; Natural vacancy rate; Rental housing;
Find related papers by JEL classification:
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location - - - Housing Supply and Markets
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