IDEAS home Printed from
   My bibliography  Save this article

Market Forces and Price Ceilings: A Classroom Experiment


  • Jamie Brown Kruse

    (East Carolina University)

  • Ozlem Ozdemir

    (Yeditepe University)

  • Mark A. Thompson

    () (Stephen F. Austin State University)


The effect of price controls on competitive equilibrium is a standard topic in many undergraduate economics courses. This classroom experiment demonstrates the effect of rent control (price ceilings) on the market for apartments. As participants in the experiment, students experience the effect of a price ceiling as buyers (renters) and sellers (landlords). The classroom-posted offer market exhibits a shortage under a binding price ceiling. Further, we explore a secondary response to rent control. When given the opportunity, landlords lower the quality of the apartments by reducing maintenance expenditures under the price ceiling, thus moving the market back to equilibrium. Since many students are themselves renters, they should relate to changes in quality due to lower maintenance by landlords. This experiment will stimulate discussion on market forces and on public policy aimed at restricting prices.

Suggested Citation

  • Jamie Brown Kruse & Ozlem Ozdemir & Mark A. Thompson, 2005. "Market Forces and Price Ceilings: A Classroom Experiment," International Review of Economic Education, Economics Network, University of Bristol, vol. 4(2), pages 73-86.
  • Handle: RePEc:che:ireepp:v:4:y:2005:i:2:p:73-86

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Smith, Vernon L, 1982. "Microeconomic Systems as an Experimental Science," American Economic Review, American Economic Association, vol. 72(5), pages 923-955, December.
    2. Isaac, R Mark & Plott, Charles R, 1981. "Price Controls and the Behavior of Auction Markets: An Experimental Examination," American Economic Review, American Economic Association, vol. 71(3), pages 448-459, June.
    3. Smith, Vernon L & Williams, Arlington W, 1981. "On Nonbinding Price Controls in a Competitive Market," American Economic Review, American Economic Association, vol. 71(3), pages 467-474, June.
    4. 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.
    5. Brown Kruse, Jamie & Thompson, Mark A., 2001. "A comparison of salient rewards in experiments: money and class points," Economics Letters, Elsevier, vol. 74(1), pages 113-117, December.
    6. Charles A. Holt, 1999. "Teaching Economics with Classroom Experiments: A Symposium," Southern Economic Journal, Southern Economic Association, vol. 65(3), pages 603-610, January.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Weisman Dennis L. & Sanders Shane D. & Moundigbaye Mantobaye, 2012. "An Instructional Exercise in Price Controls: Product Quality, Misallocation, and Public Policy," Journal of Industrial Organization Education, De Gruyter, vol. 6(1), pages 1-21, December.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:che:ireepp:v:4:y:2005:i:2:p:73-86. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martin Poulter). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.