The Misallocation of Housing Under Rent Control
AbstractWhen there are binding price controls, there are shortages and the allocation of goods across consumers may not be efficient. In general, the misallocation costs of price controls are first order, while the classic welfare losses due to undersupply are second order. This paper presents an empirical methodology for estimating the degree of misallocation of housing units due to rent control in New York City. This methodology involves comparing the relative consumption of different demographic groups within the rent controlled area with the relative levels of consumption in a free market area. Our best estimate of the costs of rent control in New York due to the misallocation of rental apartments is 200 dollars per apartment annually.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6220.
Date of creation: Oct 1997
Date of revision:
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Other versions of this item:
- R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
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NBER Working Papers
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- Edward L. Glaeser & Erzo F. P. Luttmer, 2003.
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