IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/22104.html

Contractual Freedom Versus Tenancy Law

Author

Listed:
  • Schmitz, Patrick W.

Abstract

We study a two-period principal-agent model of rental housing in which a landlord (principal) offers a contract to a tenant (agent). After the first period, a cost shock may occur that increases the landlord's cost of providing the apartment in the second period. Two scenarios are compared. In one scenario, there is full contractual freedom, while in the other scenario, there is a tenancy law requiring the landlord to continue renting in the second period if the apartment was rented in the first period. Under symmetric information, gains from trade in the tenancy law regime can never exceed those under contractual freedom. However, we show that when the tenant has private information, the tenancy law can lead to strictly higher gains from trade.

Suggested Citation

  • Schmitz, Patrick W., 2026. "Contractual Freedom Versus Tenancy Law," CEPR Discussion Papers 22104, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:22104
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP22104
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K25 - Law and Economics - - Regulation and Business Law - - - Real Estate Law
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    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:cpr:ceprdp:22104. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CEPR (email available below). General contact details of provider: https://cepr.org/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.