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Rent control and misallocation

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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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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  1. 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.
  2. 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.
  3. 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.
  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. Edward L. Glaeser, 1996. "The Social Costs of Rent Control Revisted," Harvard Institute of Economic Research Working Papers 1747, Harvard - Institute of Economic Research.
  6. Edward L. Glaeser & Erzo F. P. Luttmer, 1997. "The Misallocation of Housing Under Rent Control," NBER Working Papers 6220, National Bureau of Economic Research, Inc.
  7. Richard Arnott, 1995. "Time for Revisionism on Rent Control?," Journal of Economic Perspectives, American Economic Association, vol. 9(1), pages 99-120, Winter.
  8. Franz Hubert, 1993. "The Impact of Rent Control on Rents in the Free Sector," Urban Studies, Urban Studies Journal Limited, vol. 30(1), pages 51-61, February.
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