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Rent control and misallocation

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Author Info

  • Bloze, Gintautas

    ()
    (Department of Business and Economics)

  • Skak, Morten

    ()
    (Department of Business and Economics)

Abstract

The paper considers welfare effects of rent control when it is applied only in a sector of a rental housing market. In rent controlled sectors of the Danish rental housing market, we find welfare reducing overallocation of square meters between 9 and 17 per cent of actual allocations. Looking at the 20 per cent most overallocated households, the overallocation of square meters is between 42 and 92 per cent, and the estimated corresponding welfare loss ranges from 1.5 to 5.3 per cent of the average annual rent in the sectors.

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File URL: http://static.sdu.dk/mediafiles//Files/Om_SDU/Institutter/Ivoe/Disc_papers/Disc_2009/dpbe7_2009.pdf
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Bibliographic Info

Paper provided by Department of Business and Economics, University of Southern Denmark in its series Discussion Papers of Business and Economics with number 7/2009.

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Length: 25 pages
Date of creation: 15 Oct 2009
Date of revision:
Handle: RePEc:hhs:sdueko:2009_007

Contact details of provider:
Postal: Department of Business and Economics, University of Southern Denmark, Campusvej 55, DK-5230 Odense M, Denmark
Phone: 65 50 32 33
Fax: 65 50 32 37
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Web page: http://www.sdu.dk/ivoe
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Related research

Keywords: Rent control; Housing; Regulation; Price ceiling; Rationing; Allocation;

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References

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  1. Hackner, Jonas & Nyberg, Sten, 2000. " Rent Control and Prices of Owner-Occupied Housing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(2), pages 311-24, June.
  2. Richard Arnott, 1995. "Time for Revisionism on Rent Control?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 99-120, Winter.
  3. 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.
  4. Morten Skak, 2008. "Projecting Demand for Rental Homes in Denmark," International Journal of Housing Policy, Taylor & Francis Journals, vol. 8(3), pages 235-262.
  5. Gyourko, Joseph & Linneman, Peter, 1990. "Rent controls and rental housing quality: A note on the effects of New York City's old controls," Journal of Urban Economics, Elsevier, vol. 27(3), pages 398-409, May.
  6. Edward L. Glaeser, 1996. "The Social Costs of Rent Control Revisited," NBER Working Papers 5441, National Bureau of Economic Research, Inc.
  7. Marks, Denton, 1984. "The effects of partial-coverage rent control on the price and quantity of rental housing," Journal of Urban Economics, Elsevier, vol. 16(3), pages 360-369, November.
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Cited by:
  1. João Miguel Ejarque & Joachim Borg Kristensen, 2013. "Rent Control and the Housing Expenditure Share," CAM Working Papers 2013-01, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.

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