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Tenancy Rent Control and Credible Commitment in Maintenance

Listed author(s):
  • Richard Arnott

    ()

    (Boston College)

  • Elizaveta Shevyakhova

Under tenancy rent control, rents are regulated within a tenancy but not between tenancies. This paper investigates the effects of tenancy rent control on housing quality, maintenance, and rehabilitation. Since the discounted revenue received over a fixed-duration tenancy depends only on the starting rent, intuitively the landlord has an incentive to spruce up the unit between tenancies in order to 'show' it well, but little incentive to maintain the unit well during the tenancy. The paper formalizes this intuition, and presents numerical examples illustrating the efficiency loss from this effect.

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Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 661.

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Length: 34 pages
Date of creation: 18 Apr 2007
Handle: RePEc:boc:bocoec:661
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