The Misallocation of Housing Under Rent Control
When 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.
|Date of creation:||Oct 1997|
|Date of revision:|
|Publication status:||published as Glaeser, Edward L. and Erzo F. P. Luttmer. "The Misallocation Of Housing Under Rent Control," American Economic Review, 2003, v93(4,Sep), 1027-1046.|
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- Edward L. Glaeser & Erzo F. P. Luttmer, 2003.
"The Misallocation of Housing Under Rent Control,"
American Economic Review,
American Economic Association, vol. 93(4), pages 1027-1046, September.
- Barzel, Yoram, 1974. "A Theory of Rationing by Waiting," Journal of Law and Economics, University of Chicago Press, vol. 17(1), pages 73-95, April.
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