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The Effect of Second Generation Rent Controls: New Evidence from Catalonia

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  • Joan Monràs
  • José García-Montalvo

Abstract

Catalonia enacted a second-generation rental cap policy that affected only some municipalities and, within those, only units with prices above their “reference” price. We show that, as intended, the policy led to a reduction in rental prices, but with price increases at the bottom and price declines at the top of the distribution. The policy also affected supply, with exit at the top which is not compensated by entry at the bottom. We show that a model with quality differences in rental units rationalizes the empirical facts and allows us to compute the welfare consequences of the policy.

Suggested Citation

  • Joan Monràs & José García-Montalvo, 2022. "The Effect of Second Generation Rent Controls: New Evidence from Catalonia," Working Papers 1345, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1345
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    Cited by:

    1. Jofre-Monseny, Jordi & Martínez-Mazza, Rodrigo & Segú, Mariona, 2023. "Effectiveness and supply effects of high-coverage rent control policies," Regional Science and Urban Economics, Elsevier, vol. 101(C).

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    More about this item

    Keywords

    rental markets; rent control; housing supply;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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